South Korean Won Climbs On Strong GDP Data

Monday in Asia, the South Korean won soared against its U.S. and Japanese counterparts as the nation's economy grew more than expected in the third quarter. The won jumped to a 5-day high against the dollar.

The South Korean GDP grew a seasonally adjusted 2.9% during the July-September quarter, above market expectations for a 2.2% rise. The rise was the fastest since the first quarter of 2002.

On an annual basis, GDP was up 0.6 percent in the third quarter compared to forecasts for a 0.3 percent decline after the 2.2 percent annual contraction in the second quarter. It also represented the first annual growth in four quarters.

A central bank official said the economy could grow by over 5% year-on-year in the fourth quarter as it slipped into a deep slump in the fourth quarter of 2008 due to the global financial meltdown.

South Korea has led a regional rebound with China and Singapore as companies including Hyundai Motor Co. and Samsung Electronics Co. reported surging profits, boosted by exports.

The central bank and the government have upgraded their economic forecasts for this year. Finance Minister Yoon Jeung Hyun said early this month the economy is likely to contract less than 1 percent in 2009 and Governor Lee says he shares that view.

To prevent the economy from sliding into a recession, the central bank cut the benchmark interest rate by 3.25 percentage points between October 2008 and February 2009 to a record-low 2 percent and the government boosted spending.

The Bank of Korea will meet on November 12 to review borrowing costs. South Korea hasn't had a rate rise since August 2008.

The South Korean stock market is trading firm today with investors picking up stocks on strong GDP report. Automobile, steel, bank and telecom stocks are among the prominent gainers. Select technology stocks are also edging higher.

The benchmark KOSPI index, which opened lower at 1,634.3 but rose to 1,633 as stocks rallied on strong buying support, is currently trading at 1,657.79, up 18.38 points, or 1.12%, over its previous close.

The South Korean won that closed last week's trading at 1188.30 against the U.S. dollar strengthened to a 5-day high of 1176.0 in early Asian deals on Monday. The next upside target level for the Korean currency is seen at 1161.1.

During early Asian deals on Monday, the South Korean won rose to 12.84 against the Japanese yen. This may be compared to Friday's close of 12.9280. On the upside, 12.811 is seen as the next target level for the Korean currency.