South Korean won plunges to new multi-year low against dollar and yen on recession fears
(RTTNews) - During early deals on Friday, the South Korean won declined to new multi-year lows against the US dollar and the Japanese yen on escalating concerns that Asia's fourth-largest economy will slip into a recession for the first time since 1998.
As the economic and financial troubles spread, the country's central bank is due to hold an emergency policy meeting next week to decide whether to join a proposed 10 trillion won or $6.57 billion fund to buy bonds issued by local companies.On November 3rd, the South Korean government unveiled a stimulus package worth 14 trillion won to boost the slowing economy. The package includes 11 trillion won fiscal spending next year and 3 trillion won tax benefits. The package also calls for 3.4 trillion won to assist small and medium sized companies and farmers. The ministry said an additional 1.3 trillion won would be spent for low-income earners.
The central bank has also slashed its base rate by 75 basis points to 4.25% from 5% in a series of cuts, including the biggest in its history, from early October, as the global downturn bites into South Korean economic growth.The South Korean economy, Asia's fourth-largest, is slumping hit by a global economic downturn as exports, which account for more than 60 percent of its economic expansion, is faltering on economic recession worldwide.
The South Korean won slumped to 1519.00 against the US dollar during early Asian deals on Friday. This set the lowest mark for the won since March 1998. On the downside, 1644 is seen as the next target level for the won. The dollar-won pair that closed Thursday's North American session at 1496.40 is currently trading at 1509.20.The South Korean won that closed Thursday's North American session at 15.9325 against the Japanese yen declined to 16.0895 at 9:35 pm ET. This set a new multi-year low for the South Korean currency.
1000KRW = 2.45MYR now compared to 3.6MYR two years ago.