Korean won sinks to 2-year low on weak Q1 growth

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South Korea’s won currency fell to a two-year low against the U.S. dollar on Thursday as the nation’s economy unexpectedly contracted in the first quarter and the dollar remained strong globally. The won was quoted at 1,158 won per U.S. dollar on Thursday’s opening, down 7.1 won from the previous session. At one point, the won was at 1,161.4 won to the dollar, its lowest level since March 10, 2017. It was the first time in about two years that the currency breached the key support level of 1,160 won against the dollar.

 

Jeon Seung-ji, a currency analyst at Samsung Futures Inc., said the won is expected to show “downward rigidity for the time being” as investors are more pessimistic about South Korea’s economy. The dollar is also showing signs of continued strength, while the eurozone’s economic recovery is being delayed, Jeon said. Earlier in the day, the Bank of Korea said gross domestic product (GDP) fell a seasonally adjusted 0.3 percent in the first quarter, marking the worst performance since the 2008 global financial crisis.

 

Capital investment dipped 10.8 percent on-quarter for the January-March period, while exports dropped 2.6 percent. The disappointing data came a week after the central bank lowered its growth outlook for South Korea’s GDP to 2.5 percent for this year from the 2.6 percent forecast in January.

(Yonhap)

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