SEOUL, Sept 5: The South Korean won was up in early domestic trade on Thursday, touching a near four-month high amid continued foreign capital inflows and despite concerns about potential intervention by local authorities to slow the currency’s rise.
The local currency was quoted at 1,092.5 against the dollar as of 0205 GMT, compared with Wednesday’s domestic close of 1,094.5. It touched an intraday high of 1,089.3, the strongest since May 9.
‘I thought the dollar-won rate could fall to 1,087-1,088 but it looks like investors are pacing themselves now because of external factors,’ a local bank dealer said.
Investors remain cautious ahead of U.S. August employment data, which could give fresh leads on the Federal Reserve’s next move. Markets are prepared for a tapering of the central bank’s bond-purchase programme starting this month, but the extent and manner in which the stimulus will be unwound remains unclear.
But the string of positive economic data, such as U.S. August auto sales, have bolstered market confidence in the global economic recovery, supporting the won.
The government also priced its 10-year dollar-denominated government bonds overnight and reported healthy demand for the debt, supporting views that the country’s strong economic fundamentals will likely prevent any exodus of foreign capital when the Fed starts tapering its stimulus.
The benchmark Korea Composite Stock Price Index was up 0.7 percent at 1,947.12.
September futures on three-year treasury bonds were down 0.03 points at 105.70, weighed by foreign selling as risk appetite improved.
(agencies)
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