Gov't Intervenes to Halt Won Nosedive

      December 20, 2011 11:03

      Forex officials intervened in the currency market on Monday after news of North Korean leader Kim Jong-il's death sent the South Korean won into a tailspin.

      The won was trading at W1,163 against the dollar in morning trade, down W3-4 from late last week on dampened investor sentiment after the downgrade of Belgium's credit rating. But news of Kim's death around noon sent it plummeting to W1,185.

      Alarmed by the sharp drop, forex authorities promptly sold dollars and bought won, bring the won back up to W1,170 at around 12:02 p.m. Exporters also unloaded their dollar holdings and bought won, seeking to profit from the peak in dollar demand, thereby further stemming the decline.

      However, the won closed at W1,174.8 on Monday, down W16.2 from Friday's close. Dealers estimate that forex authorities unloaded around US$500 million during the day's trade.

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