Won tipped to hit four-year high of 1,050 against greenback

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Won tipped to hit four-year high of 1,050 against greenback

The Korean currency is expected to strengthen to 1,050 won against the U.S. dollar, its strongest since the 2008 financial crisis, due to quantitative easing by economic powers and the latest rise in Korea’s credit ratings, market watchers said yesterday.

Central banks in the United States, the euro zone and Japan conducted economic stimulus programs, known as QE3, in September, triggering concerns over the possible inflow of more liquidity from abroad.

Moody’s, Fitch Ratings and Standard & Poor’s, three major appraisers, hiked their ratings on Korea by a notch between late August and September, citing the country’s improved fiscal soundness.

On Friday, the Korean won finished at 1,103.30 won versus the dollar on the local currency market, its strongest since Sept. 9 last year when it was 1,077.30 won against the greenback.

Market watchers expect the Korean currency to fall below the 1,100 won mark at the end of this year and below 1,050 won next year.

LG Economic Research Institute, forecast last month that the won would depreciate to as low as 1,117 won at the end of the year and to 1,080 won next year. However, the economic think tank has cut its prediction for next year’s won-dollar rate to 1,040 won from its projection of 1,080 won in September.

Another local economic think tank, Samsung Economic Research Institute, expects the won-dollar exchange rate to fall below 1,100 won in 2013.

International investment banks such as BNP Paribas, Bank of America Merrill Lynch and Standard Chartered also forecast the won-dollar rate will fall sharply against the U.S. dollar next year.

BNP Paribas and Bank of America Merrill Lynch are betting it will fall to 1,000 won, while Standard Chartered has forecast 1,040 won.

Yonhap

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