South Korean won went down from a 19- month high against the dollar after the Government sources said that the gains were disproportionate and indicated that it may intervene.
It is not clear whether the Bank of Korea would resort to buying or selling currencies on behalf of the Government as a part of intervention.
The move from Government came as the currency gained around 20 percent over the year & the concerns were raised that this would decrease the exporters’ profit. The rise of won is a result of over optimism placed by the trades on won & the Government is considering to intervene to stabilize the currency.
The won weakened 0.6 percent to 1,110.15 per dollar, after going low as much as 1 percent to 1,114.45, the weakest level for the month of April. The currency appreciated yesterday to 1,102.85, the strongest since September. It is anticipated that the currency may advance to 1,050 by the end of this quarter.
As per stock market data the net buying in South Korean markets by global investors was around $9 billion this year& Kospi index rose by around 30 percent over last year.
Samsung Life Insurance Co. is proposing the biggest IPO for selling stocks in South Korea (4.89 trillion won or $4.4 billion). This has resulted in higher demand for Korean Won as investors seek the currency to invest in IPO.
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