The South Korean won rose against the dollar on Monday as worries about a credit squeeze eased, but South Korean currency was still at a two-month low as uncertainty lingered over global credit markets.
Asia's central banks took further steps on Monday to calm markets, and South Korea's Finance Ministry said it stood ready to supply emergency funds if credit dried up due to the turmoil in US subprime mortgages.
But dealers started slowly seeking dollars, with exporters sluggish in selling dollars. A narrowed gap in exchange rates between the spot and forward markets could make exporters' dollar spot offers less profitable than before.
"We view the central banks' steps as a move to extinguish an emergency fire," a foreign bank dealer said. "Given that potential risk factors linger on, we are moving towards dollar buying in a cautious manner."
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