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Korean won hits 9-month low vs. dollar after Q3 GDP data

Collected: 2016.12.24

Distributed: 2016.12.26

Source: Go Direct

The Korean won lost psychologically-important grounds against the U.S. dollar after revised third-quarter gross domestic product data further suggested the U.S. economy on firm rebound, raising jitters about acceleration in foreign capital flight from the local markets.

The dollar opened Friday at 1,205.0 won, higher than previous close of 1,199.1 won, as the greenback gained more traction in strengthening trend after the Commerce Department revised up seasonally adjusted GDP growth to 3.5 percent - best performance in two years - from previous 3.2 percent for July-September period to reflect better consumer spending and business environment. It finished lower at 1,201.6 won, the first time over 1,200-won-threshold since March 10 last year.

The 1,200-won is considered psychologically critical as foreign capital usually pulled out of the Korean stock and bond markets when the local currency weakened to that level against the dollar.

“Sharp weakening of the won is not necessarily is a boon for exports-reliant economy as it raises import cost for manufacturers,” said Min Kyung-won, analyst at NH Futures Co.

The dollar has been strengthening against major and emerging market currencies after real estate mogul Donald Trump won the U.S. presidential election promising of heavy infrastructure spending and tax cuts to fuel annual growth of 3 percent to 4 percent. The upward spiral also was fueled the U.S. Federal Reserve’s indication of three quarter-point hikes next year after it raised the short-term interest rates two weeks ago.

By Bae Mi-jung and Park Yoon-ye

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