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Korean won expected to continue strengthening against U.S. dollar

Updated: 2014-05-13 06:26:53 KST
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Expectations are growing of a stronger Korean won, which is already trading at the 1,20 level against the U.S. dollar.
Market watchers say that, by the end of this year, the won is likely to breach the psychologically-important 1-thousand level.
The Bank of Tokyo-Mitsubishi UFJ predicts the Korean won to trade at 975 against the dollar,while the American banking company Wells Fargo expects it to trade at 990.
Analysts attribute the strength of the won to the widely shared perception that the Korean currency is undervalued.
The IMF has recently said it believed the won is undervalued by as much as eight percent and that the country has an unusually large current account surplus, which accounted for some six percent of the nation's gross domestic product last year.
The U.S. Treasury Department called on Korea last month to limit foreign exchange intervention to exceptional circumstances.
While there are concerns that the won is gaining strength too quickly, some analysts point out that a strong dollar later this year could reverse the trend.


"The recovery in the U.S. economy is back on track and by September this year, when the Federal Reserve plans to end its stimulus programs, market expectations of a rate rise will mount, pushing up the value of the dollar."

With slowing exports to China, Park adds that even if the local currency does in fact dip to below the 1-thousand level against the greenback, it will remain there only temporarily.
Hwang Ji-hye, Arirang News.


Reporter : emilyfwang@arirang.co.kr

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