Won Wades into Unfamiliar Territory

South Korea's won had a great day against the dollar, rising after Federal Reserve officials announced that sustained government intervention is needed to keep the American economy from slipping into a second recession. The dollar has been hammered this week, particularly yesterday. Federal Reserve Chairman Ben Bernanke said that there was still a need for economic stimulus to boost what has been a disappointing economic recovery. Whether that stimulus would be increased government spending or another round of quantitative easing is unknown, as Bernanke is keeping his cards close to the chest. For its part, the won has not benefited from any currency weakening efforts on behalf of the South Korean government. Finance Minister Bahk Jae Wan told parliament that the government was not artificially weakening the currency, and therefore the gains are due to either a decline in the dollar or a rise in South Korean outlooks. The outlook for America does not appear to be rosy, especially in light of Bernanke's neutral-to-negative press conference yesterday. A declining economy suggests that the dollar might decline in the near term, leaving currencies like the won some room to gain. “Bernanke's comments suggest that the U.S. economy is sluggish, damping demand for the dollar and boosting appetite for riskier assets,” said Han Sung Min, currency dealer at Busan Bank in Seoul. “Concerns that South Korean authorities may step in, in case the won gains are rapid, are weighing on the won.” Korea's economy is growing as expected, expanding 1.3 percent last quarter. GDP grew more than four percent.