Updated May. 08, 2014 06:13
The Korean currency rose to its highest in five years and nine months against the U.S. dollar on Wednesday. As the won`s strength increased concerns over the price competitiveness in Korean exporters, Seoul`s main stock price index also fell below the 1,940-point mark to hit the lowest in more than a month.
In Seoul`s foreign exchange market, the Korean won closed at 1,022.5 won against the dollar, down by 7.8 won from the previous trading day to hit the lowest since August 8, 2008, when it reached 1,027.9 won per dollar.
The won has been under downward pressure due to increased influxes of dollars sparked by Korea`s continued current account and trade surpluses. In addition, prospects that the U.S. Federal Reserve Board will likely maintain its monetary easing for a considerable period in the future fanned the U.S. currency`s depreciation in the international financial markets. The won gained further in the afternoon, as the expectation that Seoul is likely to admit the big trend of a stronger won and refrain from intervening in the market. After the market closed Wednesday, Strategy and Finance Minister Hyun Oh-seok told reporters that the government will closely watch the exchange rate.
The won`s ascent sent shockwaves to the local stock market. The Korea Composite Stock Price Index ended down 19.56 points, or 1 percent, at 1,939.88, the lowest close since March 21 when the index finished at 1,934.94.