S.Korean won's volatility to dollar hit 6-year high in 2016

South Korean currency's volatility to the US dollar hit the highest in six years in 2016 on external uncertainties including the presidential election and the expected rate hike in the US, central bank data showed on Thursday.

Daily volatility, which means daily difference between highs and lows in the won/dollar exchange rate, averaged 0.65 per cent in 2016, according to the Bank of Korea (BOK). It was higher than the previous year's 0.58 per cent, marking the highest since 2010, Xinhua news agency reported.

The dollar's volatility increased ahead of the US election, which led to the inauguration of President-elect Donald Trump on Friday.

The US Federal Reserve lifted its benchmark rate by a quarter percentage point in December and hinted at three rate increases this year. Uncertainties about the Fed's rate-setting policy expanded the foreign exchange market's volatility.

Volatility for currencies of Group of 20 (G20) member countries posted a daily average of 0.56 per cent in 2016, up from 0.53 per cent a year earlier.

Higher currency volatility raises currency risks, which may lead to the weakening of global trade and investment in other countries.

As of the end of last year, the won/dollar exchange rate was 1,207.7 won per dollar, up 35.2 per cent from a year earlier. It means the South Korean currency's 2.9 per cent depreciation to the greenback.