The South Korean won will be little changed in 2006 as a shrinking local current account surplus is offset by an end to the US campaign of interest rate rises, the country's top state-run bank said on Sunday.
But the won would be significantly influenced if China revalued the yuan again or if foreign investors turned net sellers in the Seoul stock market during 2006, the Korea Development Bank (KDB) said in a report.
The bank, the most active player among state-run banks in the local currency market, forecast the won would average about 1,010 per dollar in 2006, about 1 percent stronger than an average of 1,024 for the first 11 months of 2005. The won's average value has risen over 10 percent this year from 2004's 1,144 per dollar. The KDB said an expected fall in the dollar against major currencies next year, after US Federal Reserve stopped raising interest rates, would help the won reverse a spike to seven-year highs against the yen.