October 24th 2006
Korean Won remains ‘stable’ in wake of nuke test
Last week, North Korea shook the world by admitting that it had defied international warnings and tested a nuclear weapon. As political strategists created diplomatic schemes and contingency scenarios, currency traders assessed the potential implications to forex markets. Many traders expected investors would begin to shift capital out of South Korea for fear that the North Korean political crisis would harm the economy of its neighbor to the south. However, no such capital flight materialized, and the Korean won was largely spared from depreciation. The JooAng Dail reports:
“There were some concerns…in the currency market in particular, but market sentiment stabilized faster than expected thanks to a large foreign exchange reserve and ability to manage risks,” the central bank said yesterday.