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Seoul: Won down as BOK seen easing next month; stocks falter

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[SEOUL] The South Korean won sagged on Friday morning on expectations the nation's central bank will cut interest rates next month following a widely-expected decision to hold policy steady earlier in the day.

A firmer dollar, underpinned by hawkish remarks overnight from two US Federal Reserve officials also pressured the won , which stood at 1,167.4 against the greenback as of 0228 GMT, down 0.4 per cent from the previous close of 1,162.6.

"Though the BOK held rates for May as expected, many are expecting a cut in June at the earliest, which would pressure the won for the time being," said Park Yuna, a foreign exchange analyst at Dongbu Securities.

South Korea's central bank held its base rate steady for the 11th straight month, as expected, and market participants believe that the BOK is waiting for more data before deciding on a rate cut.

"Also, investors are turning away from risky assets again due to hawkish statements from Fed officials," Ms Park said.

On Thursday, Boston Fed President Eric Rosengren suggested a rate hike if second-quarter economic data shows strength, while Kansas City Fed President Esther George said current interest rates are too low.

South Korean shares were down, weighed by another wobbly session for US stocks.

The Korea Composite Stock Price Index (Kospi) was down 0.5 per cent at 1,968.38 points.

Foreign investors were poised to be on the negative side of trading, selling 81.3 billion Korean won (S$95.77 million) worth of Kospi shares near mid-session.

Decliners outnumbered advancers 453 to 339.

Market heavyweight Samsung Electronics Co Ltd shares fell 2.0 per cent, while Posco was down 3.1 per cent.

June futures on three-year treasury bonds lost 0.08 point to 110.34.

REUTERS