Asian currencies struggle in forex trading

The Korean won is struggling in currency trading on the FX market right now, due largely in part to a dollar shortage. Liquidity problems are causing problems in South Korea right now, reports the Forex Blog:

Ultimately, the Won’s decline is being driven by an acute shortage of Dollars. A relatively large portion of Korean public and private debt is denominated in foreign currency. The collapse in liquidity spurred by the credit crisis and consequent decline in bank lending have made it very difficult for South Korean borrowers to procure the requisite Dollars to repay their loans, causing a large imbalance in the supply and demand for the Dollar within Korea

This issue is probably not limited to South Korea. Many Asian currencies have this same trouble in forex trading. This is because the U.S. dollar — for now — is the reserve currency of choice. With dollars (and U.S. Treasuries) being used to help stabilize other countries and markets, it is not much of a surprise that dollar shortages are affecting emerging market currencies in Asia and elsewhere.

See Also

• Asian Currencies in Forex Trading
  Currency trading on the FX market