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SEOUL: South Korea's won fell Monday to its lowest level against the dollar in more than six years on concerns about a increasing shortage of foreign currency funding.
The won closed at 1,269 to the greenback, its weakest since May 16, 2002 when it finished at 1,269.8. It fell 5.2 per cent against the US unit last week alone.
Market participants seem to have lost trust in the government's ability to stabilise the foreign exchange market, Won Jong-Hyuck, an analyst at SK Securities, told Dow Jones Newswires.
"The Korean won underperformed other Asian currencies against the US dollar, fanning unease among investors," said Oh Hyun-Seok, a Samsung Securities analyst.
Dealers said a slump in the local stock market also fanned demand for the dollar. The benchmark KOSPI plunged 4.29 per cent to a yearly low of 1,358.75 on massive sell-offs by foreign and institutional investors.
Finance Minister Kang Man-Soo urged local banks not to hold on to excessive amounts of foreign reserves as this may reduce trade financing and create difficulties for smaller exporters.
He said it would take a long time before the effects of a 700-million-dollar US bailout plan are felt in other markets.
- AFP/ir
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