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South Korea’s currency falls to 6 year low

South Korea’s currency falls to 6 year low

SEOUL: South Korea’s currency on Wednesday fell to the lowest in almost six years as the US dollar rebounded on risk-averse sentiment and expectations spread for further interest rate cuts in South Korea.

The South Korean won finished at 1,227.1 per US dollar, down 10.5 won from the previous session, Xinhua reported. It posted the lowest in five years and seven months since July 2 when the exchange rate settled at 1,228.4 won versus the greenback.

Global crude oil prices turned downward as major oil-producing countries agreed to freeze production, rather than reduction, fuelling expectations for supply glut. It resulted in risk-averse sentiment, bolstering up the US dollar value.

Expectations for further rate cuts in South Korea added downward pressures on the South Korean currency. The Bank of Korea (BOK) kept its benchmark interest rate on hold at a record low of 1.5 percent on Tuesday, refraining from altering the rate for eight straight months.

But, one policymaker cast a dissenting vote in favour of a 25-basis-point rate cut, triggering speculation over more expansionary monetary policy in March or April. The benchmark Kospi index dipped 0.23 percent to settle at 1,883.94, posting a decline in three sessions amid spreading aversion for risky assets like stocks.

Foreigners turned into net sellers in four sessions by offloading a net 15 billion won worth of stocks. Retail investors dumped 123 billion won worth of shares, but local institutions purchased stocks worth 64 billion won. Large-cap shares ended mixed. Market bellwether Samsung Electronics gained 1.5 percent, and the state-run power supplier Korea Electric Power Corp. advanced 2.1 percent.

Top carmaker Hyundai Motor surged 4.3 percent, and memory chip giant SK Hynix climbed four percent. Leading chemical company LG Chem declined 2.9 percent, and the biggest cosmetics maker Amore Pacific tumbled 5.2 percent.