Foreign Currency Rate Noise-Dives … One Dollar for 1213.5 Won

Because of the possibility of the US economy being stagnated the anxiety spread and made US dollar devaluated. The instability of world economy affects Korean stock market with stagnation.

In Seoul currency market at 24th of June, the currency rate of Won for US dollar dropped by 5.9Won and traded 1213.5 Won for 1 US dollars at lowest level of this year. It is also the lowest level for last 18 months since 19th of December in 2000 (1209.2 Won).

Immediate after the open of the market, large volume of US dollars were offered for sale and the currency rate dropped by 5.1 Won compared to last week. As the volume of US dollars for sale increased, the rate dropped sharply and recorded at 1210.7 Won at a peak by dropping 9 Won. The Ministry of finance and Economy intervene in the market and stabilized the devaluation. Once, The Ministry of finance and Economy and the Korean Central Bank used to monitor the foreign currency market frequently under an extreme emergency.

If the currency rate for US dollar drops below 1,200Won or rate for Japanese 100Yen for 980 Won, the authority concerned foreign currency is expected to intervene in the market directly and purchase US dollars to keep international competitiveness of major exporting items.

Chung Dong Chun, the Manager of Korean Foreign Bank said “The government may intervene in the market if currency rate of Won for US dollar drops below 1,200 Won to stabilize psychological anxiety and reduce the burdens of exporting business.”

Korean Stock Market closed with 767.92 point of Korean Composite Stock Index by drop of by 10.61 points (1.36%) compared to last week. It was the lowest level for last 4 months with the collapse of 770 points. KOSDAQ Index has decreased for last 6 days successively and dropped to 63 points, which is the lowest level for last 7 months.

Korean Composite Stock Index dropped to 755.81 points once due to the sale of institutional and personal investors, but the drop was stabilized by the purchase of institutional and foreign investors. The decreasing trend in the morning of NASDAQ Futures changed into increasing trend around closing time, and it revived investors’ confidence.

KOSDAQ Index recorded the lowest annual level of 63.91 points by dropping 1.90 points (2.89%). The index dropped by 11.7% for last 6 days and decreased by 32.5% compared to the annual maximum level of 94.30 points.

The level of Customer’s’ deposit also recorded the lowest level of this year at 9.66 trillion Won by decreased of 295.2 billion Won.

Sang-Chul Kim sckim007@donga.com