By Kim Yon-se
Staff Reporter


The Korean currency gained to its strongest level in seven years against the dollar, closing at 1,103.6 won per dollar, up 1.7 won from a day before. The won-dollar crossing rate Tuesday is the lowest since the 1,085 reported on Nov. 27, 1997.

The won to dollar exchange rate is forecast to drop below the 1,100 won level at the end of the month or early next month amid the rapidly falling pace of the past few weeks.

Many currency dealers have begun revising their outlook on the won-dollar rate downward for the near future. Some say the won will gain value versus the greenback, up to 1,000 won by the end of the year.

In its report, LG Investment & Securities forecast the won-to-dollar exchange rate would plunge to the 900 level within several years, saying that the situation involving the weak dollar and possible appreciation of the Chinese yuan would continue over the next few years.

There is a growing speculation that the nation’s policymakers are tolerating the strong won but exporters and trade organizations have claimed the optimum level for the won-dollar exchange rate is around 1,200 won.

A researcher at the Korea Institute for International Economic Policy said, ``The recent pace of won appreciation is worrisome and we believe the optimum won-dollar rate to be 1,180-1,210 won.’’

If the won-dollar rate falls below the 1,100 mark, the competitiveness in the U.S. market of Korea’s exporting companies will be damaged, a Bank of Korea official said. ``It also has some effect on our exports to China.’’

``With the Korean economy in a weak and fragile state and without much direction, the nation needs to focus all its strength on exports,’’ he added.

After reaching 1,195 won per dollar on Jan. 2, the Korean currency has continued to gain strength this year, up more than 90 won (with the won-dollar rate dropping) over the past 10 months.

Without any unexpected external shocks, the won is likely to get stronger toward the end of this year amid the U.S.’ growing current account deficit, according to a majority of foreign currency analysts.

kys@koreatimes.co.kr