Won forecast to slide 5.4% in 3 monthsKorea’s won will post its worst quarter in a year as Europe’s financial crisis saps demand for exports, according to Credit Suisse Group, the top forecaster.
The currency will fall 5.4 percent to 1,200 per dollar in three months, the weakest level since October, Ray Farris, the Singapore-based head of Asia Pacific fixed-income strategy, said in a Wednesday interview.
The second-largest Swiss bank had the closest estimates in the last six quarters as measured by Bloomberg Rankings. The projection is more bearish than the 1,170 median estimate in a Bloomberg survey of 27 analysts.
Slowing growth in the euro area has prompted the government to cut forecasts for gross domestic product in 2012 and those for exports, which contribute about 50 percent to the $1 trillion economy. A 3.2 percent rally in the won over the past month will fade as risk aversion once again becomes the dominant theme for Asian markets, according to Sydney-based Westpac Banking.
“Most indicators point to weaker Asian export growth, and with domestic demand extremely weak in Korea, slower exports will have a disproportionately negative impact on the economy,” Farris said. “We still have concerns about the euro area, predominantly from a growth perspective.”
The won has appreciated 0.6 percent to 1,138.59 per dollar since June 29, when European leaders reached an agreement on measures to resolve its two-year-old debt crisis, which has shaved $3.9 trillion from global stock markets since touching the year’s high in March.
Officials overseeing the 17 nations sharing the single European currency agreed to spend 120 billion euros ($150 billion) to stimulate economic growth and dropped conditions on emergency loans to Spanish banks at the conclusion of a June 28-29 summit in Brussels.
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