By Lee Jae-won
South Korea is surrounded by the sea on all sides but one. The country is virtually an island as it is bordered to the north by reclusive North Korea.
Emerging central banks that sold billions of dollars over the summer in defence of their currencies might soon be forced to do the opposite. Japan's massive currency intervention on Monday knocked the yen substantially lower not only versus the dollar but also against other Asian currencies. The action is unlikely to sit well with other central banks struggling to boost economic growth and raises the prospect of a fresh round of tit-for-tat currency depreciations. Already on Monday, central banks from South Korea and Singapore were suspected of wading into currency markets to buy dollars and push down their currencies which have recovered strongly from September's selloff. The won for instance is up 6.9 percent in October against the dollar -- its biggest monthly gain since April 2009. The Singapore dollar is up 4.5 percent, the result of a huge improvement in risk appetite.
The White House could face the embarrassing possibility of President Barack Obama hosting the annual APEC leaders summit in November without managing to win approval of free trade pacts with South Korea, Colombia and Panama.