[Year-end Review] FX and Stock Markets Plummet in 2nd Half

The domestic foreign exchange and stock markets in 2008 faced their biggest difficulties since the Asian currency crisis 10 years ago. They closed for the year yesterday.

Fortunately, the financial market stabilized to a certain extent this month, but the won’s value finished down around 25 percent to the U.S. dollar from a year ago and stock prices were almost halved in the second half.

The won yesterday finished at 1,259.50 per dollar, down 3.5 points. Importers’ demand for dollars put upward pressure on the exchange rate, but the government is known to have bought won to help the Korean currency to finish higher.

After four days of fall, the won-dollar rate fell below 1,260 for the first time since being in the 1,250 range Oct. 30. Accordingly, the middle rate as of today as used by companies and banks to settle their accounts for the year will be 1,257.50.

This year’s closing rate was 323.40 points higher than that of last year. The won’s drop in value this year was the biggest since 1997, when it plunged 50.2 percent.

The won fell 568.01 points against the Japanese yen to 1,396.34 won per 100 yen. The Korean currency lost 40.7 percent of its value against the yen this year.

Korea’s benchmark KOSPI stock index jumped 6.88 points (0.62 percent) from a day ago to close at 1,124.47 yesterday. Net buying by foreign investors reached 190 billion won (143 million U.S. dollars) and that of institutions 250 billion won (188 million dollars), helping the index jump. The tech-heavy KOSDAQ also grew 2.87 points (0.87 percent) to close at 332.05.

In the wake of the global financial crisis, the KOSPI was almost halved from Dec. 28, the last trading day, last year. The index plunged 40.73 percent from 1,897.13 to 1,124.47 over the one-year period and the KOSDAQ plummeted 52.85 percent from 704.23 to 332.05.

parky@donga.com jefflee@donga.com