Won and yen lose value on oil concerns
The South Korean won and the Japanese yen both lost value in relation to the US dollar on Tuesday as rising oil prices led to concerns that the nations’ balances of payments could be threatened since neither one has significant oil reserves.
Japan’s trade surplus has fallen to a 4-year low mostly due to oil imports, while the governor of South Korea’s central bank said on Tuesday that the hike in oil prices could take 0.7 percentage points off the growth of Korea’s gross domestic product this year.
The won lost 1.1 percent in relation to the US dollar to Won1,024, a two month low. The yen fell 0.8 percent to an eight-month low of ¥110.07 against the US dollar before recovering slightly to ¥109.91 by the close of trade.
Meanwhile, the US dollar advanced in relation to the euro and sterling ahead of an expected rise in interest rates during the meeting of the US Federal Reserve, which began today.
The dollar was up 0.7 percent to $1.2073 in relation to the euro. It also gained 0.7 percent against sterling, to $1.8160.
The New Zealand and Australian dollars both lost ground to the US dollar. The Australian dollar declined by 0.7 percent to $0.7643 against the US dollar, while the New Zealand dollar fell by 0.9 percent to $0.701 in relation to the US dollar as New Zealand reported a trade deficit of NZ$25 million in May. This pushed the annual deficit to its highest level since the mid-1970s.
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