Korea: Won picks up in October
October 31, 2011
By 31 October, the Korean won (KRW) had appreciated 6.1% in nominal terms over the previous month and traded at 1,110 KRW per USD. The October rise contrasted the 9.4% depreciation observed in September, when the KRW traded at 1,178 KRW per USD. Moreover, the reading represented the fastest monthly appreciation since April 2009 and marked the first pick-up in the value of the won after two consecutive monthly drops. As a consequence of the October reading, the KRW has now appreciated an accumulated 2.2% versus the USD this year and, at the current level, is trading 1.4% above the same month last year. The Korean currency had depreciated between August and September on the back of deteriorating prospects for the global economy. Currently, the won is experiencing increased volatility as uncertainty persists in international financial markets. During the first half of November the won dropped again, falling to 1,139 KRW per USD by 18 November and marking a 2.5% depreciation compared to the end of October. Against this backdrop, the Bank of Korea (BoK) remains active on the currency front and is stepping up measures aimed at stabilizing the value of the won. On 27 October, the BoK and the People's Bank of China agreed to expand to USD 56.5 billion the total size of an existing USD 33.5 billion currency swap arrangement, signed in April 2009. The deal, which will last until October 2015, follows on a similar USD 70.0 billion agreement reached by Korean and Japanese monetary authorities on 19 October. According to the Korean Central Bank, the extension of the currency swap ?will mitigate adverse influences of heightened uncertainty in the global market on the two fundamentally sound and well-managed economies and contribute to promoting bilateral trade for stable economic development.?
Author: Armando Ciccarelli, Head of Data Solutions