Dollars toast... official
hankooki.com
Won Expected to Keep Climbing Against Dollar
By Kim Jae-kyoung
Staff Reporter
The Korean won is expected to gain ground further against the U.S. dollar, as it is likely to jump to the 1,200 won level by the end of this year, private economic think tanks said yesterday.
The Samsung Economic Research Institute revised the won-dollar exchange rate forecast to 1,250 won during the third quarter, and 1,230 won for the fourth quarter, both down 20 won, compared with its earlier projection.
The private think tank attributed its revised forecast to the delayed recovery of the U.S. economy as well as a slower inflow of foreign capital.
Daewoo Securities also pulled down its exchange rate forecast to 1,220 won and 1,200 won versus the dollar for the third and fourth quarter, respectively, down 40 won and 30 won from the earlier prediction.
The local currency closed Thursday at 1,246.10 won against the dollar, the highest since it finished at 1,244.30 won on Feb. 22 last year. The value of the won gained around 3.7 percent or 47.90 won compared with the 1,294 won at the end of April.
``The won's appreciation is not expected to dampen export price competitiveness, though it might hurt corporate profitability,'' said Kwon Soon-wu, a researcher at the Samsung Economic Research Institute. ``If the won gains by 100 won to the dollar, combined Korean corporate operating profits will decrease around 9 trillion won.
``The won is likely to continue to strengthen against the dollar in the latter half of the year, but since the won goes in the same direction with the Japanese yen, it is hard to forecast the future course of the local currency,'' said Kim Do-won, an official at the Bank of Korea (BOK).
``Small- and medium-sized enterprises are more exposed to foreign exchange risks caused by the won's rapid rise, though it is unlikely to have a large effect on the nation's total exports,'' he said.
He explained that small firms do not have proper foreign exchange risk management systems as they are inclined to overlook their importance, while large companies are hardly affected by the rise as they are equipped with various hedge methods.
Dongwon Securities also took 30 won off its third and fourth quarter exchange forecasts to 1,210 won and 1,230 won, respectively.
The brokerage houses predicted that it is probable that the won's strength will continue for the time being, as the Korean government is tolerating the appreciation in a move to keep inflationary pressures in check while the Japanese economy is showing signs of recovery. |
