SEOUL– The South Korean currency weakened against the U.S. dollar for the third straight session on Friday as major currencies continued to lose ground and gloomy trade data suggested worsening headwinds for the country’s export-dependent economy.
The local currency ended at 1,439.80 won per the greenback, down 6.50 won from a day earlier. The won fell to as low as 1,441.00 at one point
This marked the third straight session that the won has fallen. The local currency has fallen 1.1 percent for the past three days, with its value having slid about 17 percent so far this year.
The won’s recent decline has apparently been affected by tumbles of major currencies, including the Japanese yen.
The yen broke through the 150 mark against the dollar for the first time in 32 years on Thursday and the currency of the world’s third largest economy continued its descent on Friday.
The dollar has been strengthening at a fast pace against other major currencies amid the U.S. Federal Reserve’s sharp rate hikes to tamp down decades-high inflation and rising risk-on sentiment that drives investors toward U.S. assets.
The Fed is widely expected to raise its benchmark interest rate by 0.75 percentage point again next month with no clear signs that price growth is easing. It would mark the Fed’s fourth straight “giant-step” rate hike.
Also weighing on the South Korean currency, in particular on Friday, was lackluster export data made public earlier in the day, which added to worries over global recession and pointed to worsening headwinds for the export-driven economy.
Customs agency data showed that the country’s exports shrank 5.5 percent from the previous year in the first 20 days of October, with imports growing 1.9 percent on-year. Korea posted a trade deficit of US$4.95 billion during the period.
Market observers cited rising jitters over the country’s corporate bond market as another factor that is pulling down the won in the wake of a recent default on municipal government-guaranteed debt worth around 200 billion won raised to fund the construction of Legoland, a theme park, in the country’s eastern province of Gangwon.
Policymakers are keeping a close eye on heightening volatility in the local foreign exchange market as a fall in the won’s value will exert additional upward pressure on inflation by making imports more expensive and force the central bank to continue more rate hikes that could hurt consumption, business investment and economic growth.
Source: Yonhap News Agency