SEOUL: The South Korean won tumbled to a near four-year low against the U.S. dollar Wednesday after China devalued its currency for two days in a row, stoking further concerns over the health of its economy.
The local currency closed at 1,190.8 won against the greenback, down 11.7 won from the previous session’s close and the lowest since 1,191.3 won on Oct. 6, 2011.
Dealers said the won plunged as foreign investors pulled their money out of the local stock market as the Chinese central bank devalued its yuan to prop up the world’s second-largest economy.
The yuan’s value against the U.S. dollar was lowered by nearly 2 percent on Tuesday and another 1.6 percent on Wednesday.
“The market expected China to take time to make a second decision after it depreciated the yuan, but it took an action the following day,” said Suh Jung-hoon, a currency dealer at the Foreign Exchange Bank. “It means that the Chinese economy is poorer than expected.”
He said a slowdown in the Chinese economy will affect the South Korean economy, which is showing budding signs of recovery. China is South Korea’s biggest trading partner.
The South Korean government said it will step up monitoring of the foreign exchange market to minimize the fallout of the Chinese devaluation.
“We are keeping close tabs on the movement of the currency market,” Finance Minister Choi Kyung-hwan told reporters. “The Chinese currency change increased the won’s volatility, coupled with a possible U.S. rate hike.”
