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Seoul: Won edges up after BOK holds rates, stocks ease on profit-taking

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[SEOUL] The South Korean won inched up on Thursday after the Bank of Korea kept interest rates on hold, but gains were capped by expectations that it will have to cut rates again in coming months if global conditions deteriorate.

The won stood at 1,142.7 as of 0205 GMT, up 0.3 per cent compared to Wednesday's close of 1,146.4.

South Korea's central bank kept interest rates to assess the impact of its surprise cut in June and to see how global uncertainties such as Britain's vote last month to leave the European Union play out.

"The upside will be limited for the won if the BOK's comments hint at additional rate cuts in the future," said Park Yuna, a foreign exchange analyst at Dongbu Securities.

She said investors are holding their positions ahead of monetary policy meetings by the Bank of England later in the day and the Bank of Japan in late July.

Markets expect both the BOE and BOJ to ease policy further, and Park said the won likely will keep to the 1,140 to 1,150 range in coming weeks unless policymakers in those countries spring a surprise.

South Korean shares slipped as the local investors took profits, with the Korea Composite Stock Price Index (Kospi) at 2,000.69 points, down 0.2 per cent compared to the previous close.

Offshore investors were set to be buyers for six consecutive sessions. They purchased a net 57.3 billion Korean won (S$67 million) worth of Kospi shares near mid-session.

Automobile shares slumped with Hyundai Motor Co losing 3.0 per cent and Kia Motors Corp slumping by 1.4 per cent.

Decliners outnumbered advancers 538 to 260.

September futures on three-year treasury bonds gained 0.04 point to 111.17.

REUTERS