The South Korean won fell the most since June, and shares fell after North Korea warned that any "confrontation escalated" will lead to war.
The won slid 1.9 percent to 1,159.63 per dollar, while the Kospi sank 1.3 percent, the most in two weeks, to 1,901.80 at the close in Seoul. The decline was deepened after KCNA agency, North Korean state news, said in a statement emailed to news organizations that the North is "greatly angered the provocation" South Korea will retaliate any invasion of their sovereignty. The currency and stocks fell ahead of military exercises between South Korea and the U.S.
The Kospi 200 Index futures expiring in December fell 0.2 percent to 249.70 in electronic trading as of 18:31 Seoul time. The index sank 1.2 percent to 249.31 in regular trading.
"Nerves remain on the market," said Lee Woo Jin, a fund manager at KTB Asset Management Co. in Seoul, which had the equivalent of $ 11 billion in assets as of September 30. "It will take time before the market stabilizes. It's the kind of issue that will resolve over time, so we'll have to wait and see."
North Korea's comments come after the November 23 bombing Yeonpyeong island, the first attack and South Korean soil in half a century. South was accused of provoking the attack. Two soldiers and two civilians were killed in the bombing, spurring U.S. President Barack Obama to send an aircraft carrier in the Yellow Sea for the years between 28 November and 1 December. to show support.
"Under Siege"
explosive shots heard Yeonpyeong Island today could have been a land artillery exercise conducted by North Korea, an official said South Korea's Defense Ministry who asked not to be identified, citing government policy. No shells landed in the territory of South Korea, he said.
The decline in the currency of South Korea and now the stock market "were not seen as a major concern," said Bank of Korea Min Sung Kee official, adding that the central bank was "on alert" and monitoring of financial markets.
The Kospi fell as much as 2.4 percent on November 24 in the first reaction of the stock market in South Korea for the bombing, before closing the day 0.2 percent lower. The currency reached a minimum of two months of 1172.50 per dollar, a day after the attack.
"This is really a great risk for the entire region, resulting in a massive sale of cattle," said Minoru Shioiri, senior manager of forex trading at Mitsubishi Tokyo UFJ Morgan Stanley Securities Co. "People do not want to keep the cattle and other currencies in the region during the weekend when we do not know what would happen. "
Today he won the fall came as the euro traded near a two-month low on concern debt crisis spread to Ireland Portugal and Spain, dimming investor sentiment towards emerging market currencies increased performance.
Bond Reduction
Government bonds fell. The yield of 4 percent due September 2015 rose six basis points, or 0.06 percentage point to 4.04 percent, the highest level in two weeks, according to the Korea Stock Exchange.
"Although the most recent act of aggression creates natural concern, it is also important to remember that the tensions in Korea, although high, are not new," said Michael Hasenstab, who helps manage $ 42,600,000,000 Templeton Global Bond Fund, in an email . "We remain focused on what we see as a strong recovery of South Korea's financial crisis, which we think should help support your local currency and asset prices."
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