SEOUL: South Korea’s won snapped a three-day rally as the dollar rose on concern that Greece is running out of cash for salaries and to repay the International Monetary Fund. The Bloomberg Dollar Spot Index advanced for a second day after Greece ordered local governments to move their funds to the central bank and Federal Reserve Bank of New York President William C. Dudley expressed optimism that U.S. interest rates will rise later this year. South Korea will consider measures to support growth if needed in the second half after monitoring economic trends, Finance Minister Choi Kyung Hwan told lawmakers in Seoul after markets closed Tuesday.
The won declined 0.4 percent, the most since April 13, to 1,083.32 a dollar in Seoul, data compiled by Bloomberg show. The Kospi Index of shares fell for the first time in eight sessions.“Concerns about Greece are weighing on risk sentiment,” said Jeon Seung Ji, a Seoul-based currency analyst for Samsung Futures Inc. Dudley’s comments on U.S. interest rates “are also a reason to sell the won,” she said.
Dudley said Monday he’s relatively optimistic that a rebound in U.S. growth will create conditions conducive for tightening monetary policy later in the year and stressed that interest rates will remain accommodative once they start rising.
South Korea’s Choi said in parliament Tuesday that it’s too early to discuss a supplementary budget, and the government will try to minimize the tax revenue shortfall this year. A Bank of Korea report presented to lawmakers said the economy is in a weak recovery.While a Fed rate increase would be “endurable,” South Korea’s central bank will implement market-stabilizing measures if the U.S. raises rates earlier than expected and if that leads to capital outflows and market volatility, according to the report.
