[Focus] Stable FX rate might be short term

The won's exchange rate against the U.S. dollar might fluctuate between 1,250 won and 1,300 won in concert with the monetary authority's will to stabilize the market and the trend of Nasdaq index, FX experts say.

The views of foreign exchange experts about the exchange rate that plunged Wednesday after a surge during the early trading session are summarized as such. The rate might slide in the short term, and the market confirmed the strong will of the government to curb the rising rate, but it might rise again if U.S. stocks, particularly the Nasdaq, falls significantly again, according to the experts.

A foreign exchange dealer at KorAm Bank said that the sharp drop of the exchange rate before closing of Wednesday's market was attributed to the spreading rumors that the government would release its foreign exchange reserve if the rate soars continuously. However, he said that it is too early to judge if the downward trend will continue.

An official at financing team of a local refinery said: "The exchange rate tends to fall or stabilize at the beginning of the month or year, but it has soared this year due to speculative demand by individuals or corporations. If the government's will is confirmed to stabilize the market, the rate might slide further."

However, Lee Nam-Woo, managing director of Samsung Securities, contended that the won's value hasn't dropped much, although the Korean currency¡¯s exchange rate has surged recently. He noted that the yen and other Asian currencies remain weak and that domestic restructuring has been delayed, adding that it is likely that the exchange rate might soar to 1,300 won per dollar.

The day's abrupt drop of the exchange rate was because of the government's intervention and the circumstances that could push the exchange rate haven't been eliminated completely, he said. In fact, Korea Development Bank and other state-run banks intervened in the market by supplying dollars to the market whenever the exchange rate rises.

Hong Chan-Sun hcs@donga.com