You are here

Seoul: Won checked by growing North Korea tension, stocks rebound

kospi.jpg

[SEOUL] The South Korean won wobbled early on Wednesday as growing worries over North Korea offset weakness in the US dollar, but foreign equity investors appeared unfazed, buying local stocks.

North Korean state media warned on Tuesday of a nuclear attack on the United States at any sign of American aggression, as a US Navy strike group steamed toward the western Pacific.

The won stood at 1,144.3 to the US dollar as of 0214 GMT, up slightly up from Tuesday's close of 1,145.8.

It touched as low as 1,149.5, its weakest since March 15.

sentifi.com

Market voices on:

Ha Keon-Hyeong, a foreign exchange analyst at Shinhan Investment Corp, said the won could fall to 1,150 if Washington issues further warnings to Pyongyang in the short-term, but doubted the won would weaken past that level.

"If we rule out current geopolitical risks, the won is still regarded stronger than the dollar in the markets due to recent upbeat exports," said Mr Ha.

South Korea's exports grew more than expected in March thanks to stronger global demand, even as souring relations with China, its biggest trading partner, continue to pose risks to its economy.

South Korean shares snapped a six-day decline as foreign investors came back in to buy the local equities.

The Korea Composite Stock Price Index (Kospi) was up 0.1 per cent at 2,125.73 points.

Offshore stock investors were set to break a seven-day selling streak. They purchased a net 25.3 billion Korean won (S$31.01 million) worth of Kospi shares near midday.

Steelmaker Posco rose 1.1 per cent while Samsung SDI fell nearly 2 per cent.

Decliners outnumbered advancers 440 to 322.

June futures on three-year treasury bonds gained 0.04 point to 109.41.

The premium for South Korean credit default swaps (CDS) rose to its highest level in nine months on Wednesday, as investors viewed the country's sovereign notes as a riskier bet amid the rising tensions between North Korea and the United States.

The CDS premium of five-year South Korean government bonds rose to 57.14 basis points as of 0150 GMT, the highest since June 2016, and up from as low as 51.143 on Tuesday.

REUTERS

Powered by GET.comGetCom