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Korean Won remains ‘stable’ in wake of nuke test !
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Korean Won remains ‘stable’ in wake of nuke test
Last week, North Korea shook the world by admitting that it had defied international warnings and tested a nuclear weapon. As political strategists created diplomatic schemes and contingency scenarios, currency traders assessed the potential implications to forex markets. Many traders expected investors would begin to shift capital out of South Korea for fear that the North Korean political crisis would harm the economy of its neighbor to the south. However, no such capital flight materialized, and the Korean won was largely spared from depreciation. The JooAng Dail reports:
“There were some concerns…in the currency market in particular, but market sentiment stabilized faster than expected thanks to a large foreign exchange reserve and ability to manage risks,” the central bank said yesterday.
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Central bank: financial, currency markets ‘stable'
October 21, 2006 ㅡ Korea's financial markets, including the currency markets, are "stable" after North Korea said it detonated its first nuclear bomb, the central bank said after a meeting with local bank presidents.
"There were some concerns about capital flight in the currency market in particular, but market sentiment stabilized faster than expected thanks to a large foreign exchange reserve and ability to manage risks," the central bank said yesterday in a statement from Seoul.
Bank of Korea Governor Lee Seong-tae met with Kookmin Bank resident Kang Chung-won, Shinhan Bank President Shin Sang-hoon and others in a monthly meeting to discuss financial market trends.
North Korea said on Oct. 9 it "successfully and safely" detonated its first nuclear bomb. The United Nations Security Council passed a unanimous resolution on Oct. 14 that bars the sale or transfer of missiles, warships, tanks, attack helicopters and combat aircraft, as well as missile-and-nuclear related goods to the communist state.
Local banks are refraining from Japanese yen loans even as yen borrowing by companies increases, the central bank statement said.
Korea's government has said it will unveil measures in November aimed at helping smaller exporters counter competition stemming from the Korean won's advance against the Japanese yen.
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