The U.S. dollar slipped under 1,200 won against the Korean currency amid global-wide weakening in the greenback due to signs of easing in the world’s largest economy that may persuade more aggressive rate move from the U.S. central bank.
The dollar fell 9.2 won from the previous closing to finish Friday at 1,196.8 won. The won strengthened amid broad weakening in the greenback following disappointing data.
The Institute for Supply Management, association of purchasing managers in the U.S. said its non-manufacturing index in September fell to 52.6 from previous month’s 56.4. The reading was even below market consensus of 55.3. This was an additional blow to the U.S. economy as the institute earlier this week reported its manufacturing purchasing managers’ index fell to 47.8 percent in September, which is the lowest since June 2009. A reading below 50 percent suggests a contraction.
Poorer economic data from the U.S. and rate cut option usually would weaken the Korean won as investors turn to safer assets on uncertainties. But there is growing bet that emerging markets may benefit this time.
“The U.S. stock markets rallied overnight on expectation that the U.S. Fed Reserve will cut the benchmark rates to bolster flagging economy,” said Min Kyung-won, an analyst at Woori Bank. “This will bring investors back to more risky investments,” said the analyst as he anticipated the won-dollar currency to go below 1,200-mark.
Against the 100 Japanese yen, the Korean won finished 1.86 up at 1,120.55.
The Korean government has gone on an IR tour to ensure investors that the country has sufficient resilience to fight off external shocks. In an IR event in London on Thursday (local time), vice finance minister vowed aggressive actions to counter economic challenges at home and abroad.
By Lee Yu-sup and Cho Jeehyun
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