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S.Korea's currency falls to 6-year low amid verbal intervention

Xinhua, February 19, 2016 Adjust font size:

South Korea's currency fell to the lowest in almost six years against the U.S. dollar on Friday despite verbal intervention by authorities that resulted in paring earlier losses.

The South Korean won finished at 1,234.4 per dollar, down 7.0 won from Thursday's close. It posted the lowest close since June 11, 2010.

Risk-averse sentiment strengthened as European Central Bank warned of downside risks. Major oil-producing countries, including Saudi Arabia, refused to reduce oil output, leading to lower crude oil prices and stronger aversion toward risky assets such as stocks.

Geopolitical risks remained on the Korean peninsula after the Democratic People's Republic of Korea (DPRK)'s fourth nuclear test on Jan. 6 and a long-range rocket launch on Feb. 7.

South Korea's intelligence agency warned of possible "terror attacks" from the DPRK, saying that top DPRK leader Kim Jong Un recently issued an order to muster up its anti-South Korea terror attack capabilities.

The won/dollar exchange rate surged to 1,239.6 won against the greenback in the morning trading, triggering a verbal intervention from the authorities.

South Korea's central bank and finance ministry said in a joint statement that recent volatility and fluctuations in the won/dollar exchange rate were excessive, expressing deep worry about herding behavior in the foreign exchange market.

The authorities said that they will take necessary measures as there has been no change in their stance that the authorities should tackle excessive moves in the foreign exchange market.

Following the verbal intervention, the South Korean currency trimmed earlier losses, closing at the early 1,230 level.

South Korea's benchmark Kospi index rose 0.4 percent as foreign investors bought local stocks worth 172 billion won. Retail and institutional investors sold shares worth 179 billion won and 68 billion won respectively.

Large-cap shares ended mixed. Top automaker Hyundai Motor gained 1.4 percent, and its affiliate Kia Motors advanced 2.8 percent. Leading chemical firm LG Chem climbed 2.9 percent, but the biggest life insurer Samsung Life Insurance lost 1.4 percent. Memory chip giant SK Hynix declined 2 percent, and the most-used search engine Naver fell 1.6 percent.

Bond prices ended lower. Yields on the liquid three-year treasury notes added 1.7 basis points to 1.468 percent, and the return on the benchmark 10-year government bonds rose 0.9 basis points to 1.814 percent. Enditem