(2nd LD) Won tumbles to 1,380 level per dollar for 1st time in over 13 years

All News 16:05 September 07, 2022

(ATTN: UPDATES with market close throughout; CHANGES photos)

SEOUL, Sept. 7 (Yonhap) -- The South Korean currency on Wednesday declined to the 1,380-won level against the U.S. dollar for the first time in more than 13 years amid a sharp decline in the country's current account surplus.

The local currency closed at 1,384.20 per dollar, down 12.50 won from the previous session's close. The won slid to as low as 1,388.40 against the greenback at one point.

It marked the weakest closing since March 30, 2009, when the local currency ended at 1,391.50 won versus the dollar. The Korean won has fallen for six straight sessions.

This photo, taken Sept. 7, 2022, shows stock and currency movements on an electronic signboard at a Hana Bank dealing room in Seoul. The Korean won ended at 1,384.20 won per dollar, down 12.50 won from the previous session's close. (Yonhap)

In afternoon trading, the won's decline was tempered on the news that foreign exchange authorities will convene a meeting with market participants later in the day to check currency movements.

Finance Minister Choo Kyung-ho made a verbal warning, saying the government will take proper steps to stabilize the foreign exchange market, if needed.

The Bank of Korea also voiced worries that the won appears to be depreciating at a fast pace recently considering the country's economic fundamentals.

The won's weakness came as the U.S. dollar remained firm against major currencies amid the Federal Reserve's aggressive monetary tightening and concerns about a global economic recession.

South Korea's narrowed current account surplus and its widening trade deficit also exerted downward pressure on the won.

South Korea posted a current account surplus for the third straight month in July, but the surplus sharply fell as the goods balance logged a deficit for the first time in about 10 years, central bank data showed.

The current account surplus came to US$1.09 billion in July, compared with a surplus of $5.61 billion posted in June. The Bank of Korea said the current account could swing to a deficit in August due to a record trade deficit.

The country logged a record trade deficit of $9.47 billion last month due to high energy costs. It posted a trade deficit for five months in a row for the first time in about 14 years.

Foreigners' stock selloffs also put downward pressure on the local currency. Seoul's main stock index fell 33.56 points or 1.39 percent to end at 2,376.46. Foreigners dumped a net 489.2 billion won ($353.3 million) worth of local stocks.

Market experts said the Korean currency could further weaken to the 1,400 level against the dollar due to strong demand for the dollar. The won has slid more than 14 percent against the dollar so far this year.