South Korean won up

The South Korean won gained against the dollar on Friday as hopes for wide-ranging steps from authorities to solve the US financial crisis eased worries about the credit crunch, bolstering global stocks. But the won had its worst week in over four months as global credit woes stemming from turmoil in the US financial sector prompted investors to dump riskier assets, such as the local currency and Seoul stocks.
The South Korean unit erased much of its early gains on dollar demand linked to foreign investor's share sales of almost 500 billion won in the previous session and on a lingering dollar-funding shortage in money markets. The won is unlikely to rise further as investors still doubt the effectiveness of global financial authorities' rescue measures, analysts said.
"The won should stay firmer than 1,120 (per dollar), given the jump in stocks, but market players keep seeking dollars," said Jeong My-young, an analyst at Samsung Futures Inc. "We need to see improvements in dollar shortages in the foreign currency money market for the currency to rise further," she added. One-year basis swaps narrowed to -327 basis points from -376 basis points on Thursday, but were still wider than around -286 basis points on Wednesday, indicating investors still had to pay a higher premium than usual to secure dollars.
The won was quoted at 1,139.9/41.1 per dollar as, compared with Thursday's domestic close of 1,153.3. It strengthened as high as 1,118.9. But the won has fallen 2.7 percent from its local close of 1,109 on September 12. The weekly loss was the biggest since the week ended May 10.
US Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke plan to work through the weekend with Congress on a comprehensive plan to deal with toxic bank assets choking the financial system, a Treasury spokeswoman said.
Governments on both sides of the Atlantic took radical steps to restore confidence in battered financial markets on Thursday, as the United States proposed a taxpayer-funded mopping up of toxic mortgage-related debt and Britain cracked down on short selling of bank stocks.