The Korean currency gained 2.6 percent against the U.S. dollar last year amid robust exports and continued capital inflows, the central bank said Monday.

The won’s gain was the smallest last year among major Asian currencies excluding the Hong Kong dollar, which lost 0.2 percent against the greenback, according to the Bank of Korea. Hong Kong has pegged its currency to the greenback.

Among major Asian currencies, the Japanese currency had the sharpest gain per greenback by rising 13.4 percent, followed by the Malaysian ringgit’s 11.8 percent gain and the Thai baht’s 11.1 percent ascent.

“The relatively smaller gain in the Korean unit came as the local currency underwent sharp losses, hit by the eurozone debt crisis and heightened cross-border tensions,” a BOK official said.

The Korean won was also one of the worst performers among 26 currencies by rising the least per dollar. Last year, the euro fell 6.6 percent and the pound lost 3.5 percent per the dollar.

The Korean won, which rose 8.2 percent per greenback in 2009, gained ground in 2010 as brisk exports and sustained foreign capital inflows, sparked by the Fed’s loose monetary policy, prodded the dollar to flow into the country.

In the second quarter, the Korean unit fell 7.4 percent per dollar on concerns over the eurozone sovereign debt crisis and geopolitical risks stemming from the results of a probe into North Korea’s deadly sinking of a Korean warship.

Meanwhile, the daily foreign exchange trading transactions among banks averaged $19.46 billion last year, up 6.3 percent from the previous year, the BOK said. In the fourth quarter, inter-bank daily foreign exchange trading averaged $19.28 billion won, up 5 percent from three months earlier.

The average daily volatility of the local currency reached 9.5 won last year, smaller than 14.6 won seen in 2009. The won’s daily volatility came in at 9.7 won in the fourth quarter, hit by heightened geopolitical risks from North Korea’s shelling of a front-line island.

The won’s on-day fluctuation averaged 0.6 percent in 2010, giving it the highest volatility among major Asian currencies.

The Korean unit’s volatility eased last year, compared with 0.71 percent in 2009 and 0.99 percent in 2008. But it contrasted with the yen’s on-day fluctuation of 0.48 percent and the Singapore dollar’s 0.28 percent, the BOK said. 

(Yonhap News)