Dollar keeps soaring, hits 13-mo. high

The U.S. dollar rose sharply against the Korean won Wednesday and closed at over 1,200 won for the first time in 13 months.

In Seoul¡¯s foreign exchange market, the dollar closed at 1,200.80 won, up 16.10 won from the previous day¡¯s close. It is the first time in 13 months that the greenback has hit the 1,200-won level since it recorded 1,200 won Oct. 29 last year.

The dollar began to rise in morning trading as exporting companies refused to sell dollars and oil refineries, which had refrained from buying dollars at the request of the government, sought US$200 million to US$300 million to meet the payments for their imports.

As foreign investors¡¯ demand for dollars to hedge against fluctuations in the won's value increased in the non-deliverable forward (NDF) markets, the dollar gained further strength against the won.

The dollar rose sharply against most Asian currencies, including the Japanese yen and the Taiwanese dollar, which further boosted its rise against the won. The dollar surged to 33.200 new Taiwanese dollars on Wednesday. At the end of the session, authorities tried to make a verbal intervention but failed to stop the dollar¡¯s climb.

A dealer at Korea Exchange Bank said that authorities seemed reluctant to actively intervene in the market because they believe the won is still overvalued compared to major Asian currencies such as the Taiwanese dollar and the Japanese yen. He forecast that the dollar would rise up to 1,220 won next week. Dealers, however, did not predict a sudden rise to recur and said that the dollar would continue to fluctuate between 1,190 and 1,220 won.