South Korean Won Falls From 1-year High Against Greenback

The South Korean won fell from a more than one year high against the US dollar during Friday's early Asian trading as South Korea's central bank kept its key interest rate on hold at a record low of 2.00% for the eighth straight month as signs of an economic recovery have yet to be conspicuous. On the other hand, the won climbed to a 2-day high against the yen, due to across the board rallying of the latter.

Most analysts expected the bank to maintain the status quo, although a few felt that the bank might follow Australia's lead from earlier in the week with a 25 basis point hike - signaling that the global economic slowdown is indeed over. But the bank's commentary indicated that a rate hike may not be coming as soon as some had expected.

The BOK lowered the rate by a total of 3.25 percentage points between October and February in a bid to put the brakes on a sharp economic free-fall.

"Looking ahead, the committee will maintain accommodative policy stance for the time being and do what is needed to bring about the continuation of the recent improving pattern of economic movements and financial market stabilization," the bank said.

The South Korean won that rose to a more than one year high of 1164.10 against the US dollar by 8:05 pm ET Thursday, lost ground thereafter. As of now, the won is trading at 1167.40 against the buck, compared with yesterday's close of 1164.60.

Since its last monetary policy announcement on September 08, the Korean won has climbed around 5.75% against the dollar as the economic indicators showed that the economy is recovering at a faster-than-expected pace. This raised market expectations that the central bank may hike the rate in the near future. But the won trimmed its gains as the BoK decided to keep rates on hold today.

From U.S., the trade gap data for August is due out at 8:30 am ET. Economists estimate that the trade gap widened to $32.9 billion in the month.

In early Asian trading on Friday, the South Korean won edged up to a 2-day high against its Japanese counterpart. The won reached 13.0920 against the yen, with 13.024 seen as the next upside target level. The yen-won pair was worth 13.17 at yesterday's New York session close.

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