Won-Yen Exchange Rate Broke off 1000 Line

Won exchange rate to 100 yen plunged below the 1000 line for the first time in 29 months. The won exchange rate to 100 yen closed at 997.27 yesterday, which is the first time since the 997.07 record of July 21st 1999.

The won exchange rate to the dollar was closed at 1312.70 in the Foreign Exchange Market in Seoul, strengthening the won value by 4.70 won compared to the closing rate of the previous day.

On the other hand, the yen, whose exchange rate marked over 132 in the New York Foreign Exchange Market, closed at 131.63 yen in the foreign exchange markets in Hong Kong and Singapore yesterday.

The strong won trend resulted from the dollar influx, thanks to the pure purchase of 210 billion won by foreign investors. Meanwhile, the yen was devalued by the influence of the strong euro and the revitalizing U.S. economic indexes. As a result, the won exchange rate to the yen went down.

Lee Eung-Baek, the team director of Foreign Exchange Market team in the Bank of Korea, noted that "It would be too early if the won-yen exchange rate trend has moved since the drop of the won exchange rate to the yen is a temporary phenomenon, created by the short term element of the stock fund influx of foreign investors." "It will recover the 1000 line once the short term influx of the stock funds is completed.` he added.

Meanwhile, the surged earning rate of bonds on the previous day was calmed down yesterday. The earning rate of the national bonds with 3 year maturity closed at 6.17 percent, which is 0.02 percent raised from the previous day.

Rae-Jeong Park ecopark@donga.com