The South Korean won weakened to an almost four-week low on Wednesday after North Korea said it is “carefully examining” plans for a missile strike on the US territory of Guam in the Pacific and US President Donald Trump promised to meet threats from Kim Jong Un’s regime “with fire and fury like the world has never seen”.
The South Korean won was down 0.8 per cent at Won1134.35, to its weakest level against the US dollar since July 14.
A statement from a Korean People’s Army spokesman carried in North Korea’s state-run KCNA news agency said the strike plan would be “put into practice in a multi-current and consecutive way any moment” once the supreme leader had made a decision about targeting the small island territory south of Japan with a population of fewer than 200,000 people.
Mr Trump said on Tuesday “North Korea best not make any more threats to the United States” following details that the country had produced a miniaturised nuclear weapon that can be carried on its ballistic missiles, according to intelligence reports cited in the Washington Post.
Sean Callow, senior currency strategist at Westpac said that as it was difficult for political leaders to figure what Pyongyang’s next step might be, the same was true for investors.
Essentially we’ve got a sharp escalation in rhetoric between North Korea and the US with new commentary coming from the US side and some far more colourful inflammatory language than we’re used to from the US side. The main thing in terms of market reaction is this is coming at a time when markets have priced in very little of the traditional risk premium on South Korean assets… The market’s has been pricing in no significant threat, no military action, just rhetoric.
South Korea’s benchmark Kospi index was 0.8 per cent lower in morning trading.