Friday in Asia, the South Korean won fell from a 3-month high against the dollar after the Bank of Korea said that the nation's economy will contract by 2.4% this year, which would be the first contraction in more than a decade. The won also eased from a 2-day high against the yen.
In a report issued today, the BoK forecast the economy would contract by 2.4 percent in 2009, a sharp change from the bank's December forecast of 2.0 percent growth.
South Korea's economy expanded by 2.2 percent in 2008.
The bank said it expects GDP growth for 2010 to swing back to a positive 3.5 percent, led by a recovery in domestic and external demand. The bank also said it expected unemployment to register 3.6 percent for the year, but looks for a rise in employment of 140,000 in 2010 thanks to an expected modest recovery in consumption and investment.
Consumer price inflation is expected to stand at an annualized rate of 2.7 percent, mainly due to a stabilization of global raw material prices and wages.
The stock market in South Korea is trading higher today, taking cues from Wall Street, where the major indices ended in positive territory following strong preliminary results from Wells Fargo for the quarter, which raised hopes that that the financials were not a lost cause, and some better-than-expected economic data.
The benchmark KOSPI Index opened today's session at 1,341, sharply higher than its previous close of 1,316, and is currently trading at 1,332, up 1.19% or 15.31 points.
The South Korean won that surged against the dollar in early Friday Asian trading lost ground after hitting a 3-month high of 1298.10 at 8:10 pm ET. Currently, the dollar-won pair is worth 1331.60, compared to Thursday's close of 1318.60. If the Korean currency falls further, it may likely target the 1362.3 level.
The South Korean won rose to a 2-day high of 13.1045 against the yen at 9:05 pm ET Thursday. Thereafter, the won edged down and the pair is presently quoted at 13.2515 with 13.56 seen as the next target level. The yen-won pair closed yesterday's North American session at 13.1315.
The Bank of Japan board members suggested that growth estimates for the Japanese economy may require a downward revision, minutes from the March 17 and 18 monetary policy meeting revealed today.
The board members agreed that financial tensions are increasing again, the minutes showed, emphasizing the need for continued substantial liquidity. There remains significant uncertainty about the timetable for recovery, the minutes showed.
Most markets across the world are closed today in observance of Good Friday.
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