The South Korean won tumbled on Wednesday, leading a broad sell-off in Asian currencies after Germany's move to ban naked short-selling of some securities rattled financial markets. Germany announced late on Tuesday a ban on some high-risk bets involving euro-denominated government bonds, credit default swaps based on those bonds, and shares in Germany's 10 top financial institutions.
The euro fell further after German President Angela Merkel said the single currency was in danger. It had dropped to a 4-year low in Asia after news out of Berlin. The won tumbled as much as 1.8 percent to 1,167.5 per dollar, the lowest since May 7, as Seoul stocks hit their lowest level in over two months as looming tighter financial regulation sapped investor appetite for riskier assets.
"Dollar bids are so strong to absorb surging exporters' deals. The won is expected to fall further in the afternoon if we see more dollar demand related to foreign investors' stock sales and from investment trust firms," said a foreign bank dealer. The peso fell as much as 0.9 percent to 45.63 per dollar, a one-week low. "Dollar/peso is higher after Germany's announcement last night. It's very volatile right now with extreme moves either way," said a trader in Manila.
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