Korean Won and Other Asian Currencies Fall

The Asian currencies declined today against the U.S. dollar as the delay of the U.S. financial rescue plan may diminish the attractiveness of the risk-ridden regional currencies in conjunction with the economic output decline in Asia.

The basket of the 10 major Asian currencies fell today after the yesterday’s testimony of the Federal Reserve Chairman Ben Bernanke and the U.S. Treasury Secretary Henry Paulson before the Congress regarding the $700 billion plan. The Congress’ reaction to this plan isn’t obvious and the debates about it may rise, delaying the much needed solution.

The financial markets all over the world are monitoring the U.S. situation now. If the world’s largest economy won’t get the stimulus and will start to decline, the emerging market’s currencies will also react with a decline due to the natural risk-aversion during the recession.

Korean won led the today’s downfall of the Asian currencies. It actually continues to decline for more than a year against the U.S. dollar now. This situation may probably change soon, as the Korean central bank may intervene to support the national currency. According to Kang Man Soo, the Finance Minister of South Korea, the current value of the won should reflect the country’s economic fundamentals.

USD/KRW rate fell from 1,160.3 to 1,154.5 as of 6:00 GMT today; this year won has lost almost 19 percent to the dollar already. USD/SGD declined from 1.4246 to 1.4189 today.

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