S.Korean financial markets hit hardest on political turmoil in Libya (4)

20:57, February 22, 2011      

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STRONGER DEMAND FOR DOLLAR

Spreading unrest across the Middle East strengthened appetite for the safe haven U.S. dollar as the downgrade of Japan's debt rating outlook also dampened demand for the South Korean won, market watchers here said.

Moody's Investors Service lowered Japan's debt rating outlook to negative from stable on concerns that the Japanese government's economic and fiscal policies "may not prove strong enough to achieve the government's deficit reduction target," while maintaining the rating at Aa2.

"Expectations are raised that demand for the U.S. dollar from local importers will be stronger, leading to weaker local currency, " Jeon Seung-ji, a research fellow at Samsung Futures in Seoul, said by phone. "South Korean won is vulnerable to swings in international oil prices, sparking offshore movement of buying dollars instead of selling won."

Source: Xinhua
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