The Korean won rose Monday to a level not seen since the 2008 global financial crisis. The won closed at W1,016.2 against the U.S. dollar on Monday, up W4.3 from the previous session and the highest in five years and 10 months.
It also rose to W991 against 100 Japanese yen, again the strongest since then.
Forex authorities have since May set W1,020 against the dollar as the line of resistance.
The won rose in afternoon trade as rate cuts by the European Central Bank were expected to propel more foreign capital into the Korean economy. Lower-than-expected U.S. employment numbers also prompted investors to dump dollars and buy won.
A series of economic indicators showing lackluster conditions in advanced countries have propelled investors to currency markets in emerging countries.
Forex authorities apparently refrained from aggressive intervention on Monday, opting instead to monitor news coming out of the U.S. and Europe.
The Korea Automotive Research Institute, run by the Hyundai-Kia Automotive Group, forecast last month that each time the won strengthens by W10 against the dollar, the domestic car industry's annual sales drops by W420 billion.
Analysts forecast that it is just a matter of time before the won strengthens to below W1,000. Morgan Stanley on Monday projected it will reach W980 against the dollar by the first quarter of 2015.