The weakening in the Korean won deepened, losing the psychologically-important 1,200 threshold versus the U.S. dollar amid insecurity on the trade front with China vowing harder line against tariff war with the United States and South Korea and Japan treading on the brink of full-fledged economic showdown
After opening at 1,203.6 on Monday, the won tumbled 1.44 percent or 17.30 against the U.S. dollar to finish at 1,215.30, the weakest since 1,215.50 on March 3, 2016.
The local currency breached the 1,200 won mark against the greenback for the first time since January 11, 2017 due to the worries that the mounting trade tensions both at home and abroad could deal a harsh blow to the export-driven Korean economy.
The Korean currency also slipped against the Japanese yen. The won fell 2.3 percent or 23.94 against the yen to 1,147.43, expanding its loss after breaching the 1,100 level last Friday for the first time since November 2016 to hit the lowest finish on Monday since 1,151.42 on July 8 2016.
The Chinese yuan plunged past the psychologically important level of 7 yuan to the U.S. dollar for the first time since 2008 amid speculation that Beijing weakened the currency in response to the U.S. President Donald Trump’s decision to impose additional tariffs on Chinese imports. Last week, Trump announced that the U.S. will levy a 10 percent tariffs on $300 billion worth of Chinese goods, in addition to the 25 percent tariffs already slapped on Chinese imports since June.
The yuan’s depreciation would make China’s exports cheaper and give the country an unfair advantage in global trade over Korea. That’s why market analysts predicted that the won would keep its weakening pace for the time being to respond to the yuan’s depreciation.
The Korean economy is faced with another hurdle from Japan following the Japanese government’s announcement last Friday that it decided to drop Korea from its whitelist countries enjoying fast-track shipment procedures. The move came a month after the neighboring nation tightened Korea-bound exports of three high-tech materials used for manufacturing displays and semiconductors, Korea’s mainstay items, in what Seoul believes was a measure to retaliate against Korean court’s rulings ordering compensation for wartime force laborers on Japanese firms.
Korean markets also tumbled on the rising uncertainties. The main Kospi market finished 2.6 percent lower to 1,946.98, extending its losing streak after falling below the 2,000 mark last Friday for the first time since January 4. The secondary Kosdaq market plummeted 7.5 percent to 569.79, dipping below the 600 level for the first time in 29 months.
By Chung Joo-won and Choi Mira
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]