Won continues to drop against dollar, hits 14-month low

The Korean won is continuing its slide against the U.S. dollar.

In Seoul's foreign exchange market Thursday, the Korean currency closed at 1,214.30 won to the dollar, up 13.50 won from the previous day. This marked a new 14-month low against the dollar.

The won opened the day's trading with a rise of 6 won and continued the surge due to foreign investors' dollar buying on the overseas non-deliverable forward (NDF) market to hedge against fluctuations in the won's value and some speculative forces.

The won's slide against the dollar was further fuelled in the afternoon, when foreign investors used the proceeds from stock sales to buy up dollars and importers sought dollars to settle their trade accounts.

Most Asian currencies, including the Taiwanese dollar, Indonesian rupiah, Thai baht and Hong Kong dollar, also dropped against the dollar, further weakening the won.

A foreign exchange dealer said that the government made a verbal intervention and Korea Asset Management Corp. (KAMCO) announced a plan to supply dollars but as the supply failed to actually take place, the won continued to fall despite dollars in export payments entering the market later in the day. But dealers expected that the market would face a correction by Friday, when dollars in export payments will enter the market en masse.