The South Korean currency rose to a six-year closing high to the U.S. dollar Wednesday despite the first verbal intervention in eight months by the authorities.
The won/dollar exchange rate retreated 2.5 won to close at 1, 009.2 won, the lowest since July 29, 2008 when the exchange rate settled at 1,008.8 won.
Upbeat manufacturing data from the United States and China boosted appetite for risky assets such as the South Korean currency, and local exporters sold dollars to buy the local currency amid the won's strong trend.
After the exchange rate fell below the psychologically important 1,010 won level, the foreign exchange authorities announced a verbal intervention, saying it was worrying about herd behavior in the market and was closely monitoring market movements. It was the first verbal intervention in some eight months.
Foreign investors bought local stocks worth more than 300 billion won (about 300 million U.S. dollars), fueling the local currency's ascent to the dollar.
The South Korean won was expected to rise further to the dollar amid the continued current account surplus and spreading appetite for risky assets in the global financial market.
Some analysts forecast that the won/dollar exchange rate would fall below the 1,000 won level in the foreseeable future. The rate below the level took place during the period from January 2006 to April 2008.