Korea: Korean won depreciates to over-five-year low
February 22, 2016
In February, the Korean won (KRW) continued to weaken against the U.S. dollar, prolonging the general depreciating trend that has been in place since May of last year. On 22 February, the currency traded at KRW 1,234 per USD, which was the weakest value in over five years. The reading was 2.9% weaker than the level observed on the same day of the previous month and 12.0% weaker than the level in the same month last year.
The depreciation of the won partly reflects the general capital outflow from emerging markets, including Korea, over rising global risk aversion, a slowdown in China and turmoil in frontier economies. Moreover, a bleaker economic outlook for Korea along with continued export sluggishness and increasing expectations for an interest rate cut by the Koran Central Bank are adding pressure on the won. On top of this, rising tensions with North Korea in recent weeks further reduced the attractiveness of Korean assets.