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Seoul: Won climbs to 1-week high as US dollar slides broadly

Thursday, April 13, 2017 - 11:32

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[SEOUL] The South Korean won rose to a one-week high on Thursday as the dollar slumped broadly on US President Donald Trump's comments that the currency was too strong, shifting investor focus away from local geopolitical risks that have hurt sentiment.

The dollar took a heavy hit after Trump said the currency "is getting too strong" and that he would prefer the Federal Reserve to keep interest rates low.

Investors took profit after the US dollar gained 2.3 per cent against the won in the past seven days.

The won was quoted at 1,128.6 against the dollar as of 0318 GMT, up 1.1 per cent compared with Wednesday's close of 1,141.4. It was the highest intraday level since April 6.

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South Korean shares also edged up, with the Korea Composite Stock Price Index (Kospi) gaining 0.2 per cent at 2,134.31 points.

The country's central bank kept interest rates unchanged for a 10th straight month, wary of geopolitical risks around North Korea and ahead of a much-anticipated US Treasury report on foreign currency policy, but had limited impact on the markets as the decision was largely expected.

"North Korea issue is not fully digested in the markets yet, but it is common for geopolitical risks to have just short-term effect especially in case of currency moves," said Paik Seokhyun, a foreign exchange analyst at Shinhan Bank.

Mr Paik added that the won is unlikely to drop below this week's lowest point as there is no additional momentum that could pressure the currency. The won dropped to as low as 1,149.7 this week.

South Korean 5-year credit default swaps (CDS) have risen by 8 basis points this month alone, remaining at the highest levels since June last year as jitters related to North Korea continued to spook investors.

Offshore investors were set to be net sellers, offloading 69.3 billion won (S$85 million) worth of Kospi shares near mid-session.

Steelmaker Posco dropped 3.7 per cent on foreign selling, while web portal Naver Corp rose 2.5 per cent on offshore purchases.

Decliners outnumbered advancers 447 to 324.

June futures on three-year treasury bonds rose 0.08 point to 109.44.

REUTERS

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