Seoul: Stocks defensive, won falls on China concern

[SEOUL] The South Korean won fell against the US dollar on Wednesday morning on renewed concerns about the slowing Chinese economy, but traders were reluctant to sell the currency aggressively before a host of central bank meetings.

The local currency lost 0.6 per cent to 1,214.3 per US dollar as of 0225 GMT, from its previous close of 1,206.7.

The pressure on the won appeared to have come partially from more gloomy data from China, South Korea's largest export market. Trade figures from China on Tuesday suggested the economic recovery remains fragile.

"The won's weakness will likely be limited as traders await the outcome from the European Central Bank's meeting tomorrow and other major economic data releases," said Jeon Seung Ji, an FX analyst at Samsung Futures.

South Korea's central bank is also due to hold its monthly policy meeting on Thursday, at which a majority of analysts polled by Reuters expect the Bank of Korea to keep its policy on hold although many see a rate cut by next month.

Other central bank meetings this week include Malaysia later on Wednesday followed by New Zealand on Thursday.

South Korean stocks also came under pressure on concern about the Chinese economy following Tuesday's trade data.

The Korea Composite Stock Price Index (KOSPI) was at 1,945.61 points as of 0225 GMT, little changed compared to its previous close.

South Korean steelmaker POSCO took a breather and fell 3.6 per cent after rising 13.6 per cent over six days.

Tech giant Samsung Electronics Co Ltd was down by 0.7 per cent, but traders expect it will benefit from plans to launch a phone upgrade programme.

Losing issues led gainers slightly by 404 to 363.

Foreign investors were net sellers accounting for a modest 18.2 billion won (S$20.81 million) worth of shares.

REUTERS