South Korean Won Drops Against Dollar And Yen

Thursday in Asia, the South Korean won showed weakness against its U.S. and Japanese counterparts on the back of weak equities. The won plummeted to a new multi-week low against the dollar.

The South Korean market is trading lower today as the overnight falls on Wall Street dampened investor sentiment. Banking stocks opened lower, coming under pressure from the decline in their US counterparts.

The benchmark Korea Composite stock Price Index, or KOSPI, is currently trading at 1630.50, down 23.36 points or 1.140%.

On Wednesday, the Korean market saw an end to the modest two-day winning streak in which it had added nearly 20 points or 1.3% along the way. For the day, the index eased 5.29 points or 0.3% to finish at 1,653.86 after trading between 1,645.56 and 1,664.52.

Among economic news, South Korea and Vietnam agreed Wednesday to upgrade their bilateral relations to a "strategic cooperative partnership," strengthening ties in the fields of economy, diplomacy, and security. This was disclosed by South Korean President Lee Myung Bak after talks with his Vietnamese counterpart Nguyen Minh Triet in Hanoi. Currently, South Korea is Vietnam's fourth largest trading partner with en estimated bilateral trade turnover of $10 billion this year.

During Asian deals on Thursday, the South Korean won slumped to a new multi-week low of 1190.15 against the dollar. If the Korean currency declines further, it may target the 1197.8 level. The dollar-won pair closed yesterday's trading at 1176.80.

The South Korean won that closed yesterday's trading at 12.9370 against the yen fell to 13.0390 in Asian deals on Thursday. The next downside target level for the Korean currency is seen at 13.0470.

On the economic front, the Ministry of Finance said today that Japan posted a merchandise trade surplus of 520.6 billion yen in September, marking the largest surplus in 18 months. It came in below forecasts for a surplus of 625.3 billion yen after the revised 183.3 billion yen surplus in August.

Imports for the month were down 36.9% on year, roughly in line with expectations for a decline of 38% on year after the 41.3% annual contraction in the previous month. Exports lost an annual 30.7% - again close to forecasts for a fall of 29.7% following the 36% decline on year in the previous month.

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