SEOUL: South Korea’s won fell to the lowest in more than three months as Greece’s decision to impose capital controls and shut banks damped demand for riskier assets.
Authorities in South Korea have contingency plans to offset possible risks from Greece and will stabilize financial markets if needed, Vice Finance Minister Joo Hyung Hwan said in Seoul Monday. The Kospi index of shares fell the most in more than a month as Greece moved to avert the collapse of its financial system after the breakdown of aid talks with international creditors, fueling concern about its exit from the euro.
The won dropped 0.8 percent to 1,125.48 a dollar as of 9:54 a.m. in Seoul, data compiled by Bloomberg show. The currency reached 1,127.55, the lowest since March 18. The euro sank as much as 1.9 percent to to $1.0955 before moving to $1.1017 from $1.1167 Friday. The Bloomberg Dollar Spot Index, which tracks the greenback versus 10 major peers, rose for a second day.
“The situation in Greece and its impact on offshore demand for South Korean assets is crucial to watch,” said Park Dae Bong, a Seoul-based currency trader at Nonghyup Bank, who sees the won falling to as low as 1,136 a dollar this week. “The possibility of a Greek exit from the euro isn’t entirely new, so it remains to be seen how far the won can weaken.”
