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S.Korean currency's volatility rises on uncertainty about new U.S. gov't

Xinhua, February 9, 2017 Adjust font size:

South Korean currency's volatility against the U.S. dollar rose last month on uncertainties about the new U.S. administration, central bank data showed on Thursday.

Intra-daily volatility in the won/dollar exchange rate increased to 0.65 percent in January from 0.51 percent in December, according to the Bank of Korea (BOK).

The exchange rate's volatility compared with the previous close also gained from 0.34 percent to 0.60 percent in the cited period.

The volatility increased as market players got more anxious about the Trump administration's economic policy. He was expected to strengthen protectionist trade policy that could destabilize the global economic order.

Major figures of the new U.S. administration made comments in favor of the weaker dollar, which led to the won's ascent to the greenback.

The won/dollar exchange rate tumbled to 1,162.1 won per dollar as of end-January from 1,207.7 won per dollar a month earlier.

Meanwhile, premium on credit default swap (CDS) to hedge the 5-year South Korean state bond against default stood at 47 basis points in January, slightly up from 45 basis points in December.

Higher premium means a higher possibility for default in the bonds, which market players bet on. Enditem