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Seoul: Won falls on Fed rate-hike view; shares up on soothed Greece worries


[SEOUL] The South Korean won fell against the dollar on Wednesday, knocked back by bolstered views that the US Federal Reserve remained on track to raise interest rates in mid-2015.

The won was also pressured by a retreating Japanese yen.

It was quoted at 1,097.1 to the dollar as of 0200 GMT, compared to 1,089.7 at Tuesday's close.

The yen/won cross rate was sitting at 9.1829, narrowly above a two-week trough and spurring caution over possible market intervention by the financial authorities to keep the local currency competitive.

"The 1,100 level will be tested again, but exporter demand for the won ahead of the Lunar New Year holidays next week could provide some support," said Hong Seok-chan, an FX strategist at Daishin Economic Research Institute.

Top US Federal Reserve official Jeffrey Lacker, a voting member of the Fed's policy setting committee, said on Tuesday that the US economy was strengthening and that the central bank should raise interest rates in June.

South Korean shares rebounded on Wednesday on hopes that Greece and its creditors will reach a last-minute deal which would allow the debt-saddled country to avert a chaotic exit from the euro zone.

Euro zone finance ministers meet later on Wednesday and EU leaders on Thursday, but officials are already downplaying the chance of a breakthrough.

The Korea Composite Stock Price Index (KOSPI) rose 0.6 per cent to 1,947.17 points as of 0200 GMT, regaining its foothold over the index's 60 day moving average.

Gains stretched across the main board, with 15 out of the 17 major sectors tracked by the bourse operator in positive territory.

SK Hynix rallied 3.3 per cent on bargain-hunting after coming off a four-day losing streak, with analysts forecasting increased memory chip demand amid growing competition between smartphone manufactures.

Risk-seeking foreign investors bought a net 69.1 billion won (US$63.0 million) worth of KOSPI shares near mid-session.

The KOSPI 200 benchmark of core stocks rose 0.5 per cent while the junior, tech-heavy KOSDAQ gained 1 per cent.

March futures on three-year treasury bonds added 2 basis points to trade at 108.47.