The South Korean currency gained ground Thursday amid overall sentiment improvement across Asia following some positive news from overseas markets regarding Brexit – United Kingdom’s exit from the European Union (EU) – and Hong Kong protests.
The U.S. dollar finished 0.7 percent lower at 1,200.2 won versus previous close of 1,207 won after trading below the 1,200 mark most of the day for the first time since August 21.
The won and other Asian currencies strengthened after Hong Kong’s Chief Executive Carrie Lam made an official announcement on Wednesday to withdraw an extradition bill that had triggered large-scale violent protests in the financial hub in Asia. The announcement reduced risks in Hong Kong’s financial market, helping improve overall investor sentiment.
The British parliament also voted on Wednesday to prevent a no-deal Brexit, which refers to the United Kingdom leaving the EU immediately on Oct. 31 without any agreements in place. UK Prime Minister Boris Johnson immediately moved to dissolve parliament and pushed for snap election but was defeated in key votes. The news eased concerns in the financial market about a possible no-deal Brexit, boosting investment demand for risky assets.
NH Futures Co. analyzed that improving investor sentiment has bolstered Asian currencies.
Growing expectations on the U.S. Federal Reserve’s interest rate cut has also weakened the U.S. dollar. Foreign buying in Korean assets also bolstered the currency.
The main Kospi closed above 2,000 mark for the first time since Aug. 2.
By Chung Joo-won and Lee Eun-joo
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]