South Korean won tumbles to over 13-year low following US inflation data

The South Korean currency, won, on Wednesday tumbled below the 1,390 mark against the greenback for the first time in over 13 years as the higher-than-expected inflation data in the US stoked worries over the Federal Reserve's more aggressive monetary tightening.

The local currency had been trading at 1,390.9 won against the US dollar as of 11 a.m. (local time), down 17.3 won from the previous session's close, reports Yonhap News Agency.

The won dipped to as low as 1,395.5 at one point.

This marked the first time the won has fallen through the 1,390 won mark since March 31, 2009.

The gloomy data battered US shares overnight. The Dow Jones Industrial Average sank 3.94 per cent, and the tech-heavy Nasdaq dived 5.16 per cent.

The won has been under downward pressure, as the dollar has gained ground against major currencies while investors are expanding dollar holdings seen as safer assets amid worries that monetary tightening could tip the US economy into a recession.

The won has depreciated over 14 per cent against the dollar so far this year.

Uncertainty over South Korea's economy, slowing exports growth and rising trade deficit are also adding to woes over the future trajectory of the local currency.

The country posted a trade deficit of $9.47 billion last month, the largest amount to date, as imports jumped 28.2 per cent on-year to a record high of $66.15 billion.

The Bank of Korea, the country's central bank, earlier said the won appears to be depreciating at a fast pace considering the country's economic fundamentals, calling for the need to step up monitoring of market situations.

 

--IANS

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