Korean Won Declines on Rate Cut

South Korean wonThe South Korean won continued to decline against the U.S. dollar today almost completing a third week of drop as the country’s central bank reduced the interest rate to the record low value.

The decline in the global stock markets also helped the won to come down against the other currencies. Traders move out their investments from the Korean economy in fear of the recession. The Bank of Korea cut the interest rate from 3 percent to 2.5 percent — the fifth time in the series of reductions that started as the response to the global financial turmoil.

However, analysts warn the market participants from going short on won en mass as it’s hard to predict the further behavior of the country’s central bank. Buying the Korean won at what it seems a bottom may also prove dangerous as the financial crisis is still a menace for the Asian region.

USD/KRW rose from 1328.4 to 1342.3 as of 10:42 GMT today after reaching its 2009 maximum value at 1345.0 several hours earlier.