Seoul: Won falls to 5-year low after corporate deal; shares down

[SEOUL] The South Korean won touched a five-year low by mid-morning on Tuesday on expectations dollar demand will rise following Tesco's sale of its largest overseas unit, Homeplus, in South Korea.

The won's loss was tightly capped as traders suspected dollar-selling intervention by foreign exchange authorities to curb the local currency's sharp fall.

The won was down 0.2 per cent at 1,205.9 per dollar as of 0153 GMT after falling as low as 1,208.8, the weakest intraday level since July 22, 2010. "Pressures are continuously weighing on the won on expectations for the dollar demand linked to the sale of Homeplus, but losses will be limited on worries over intervention by the authorities around 1,210 level," said Jeon Seung-ji, a foreign exchange analyst at Samsung Futures.

Mr Jeon mentioned that China's trade data could raise volatility in the local currency market.

China's trade data is due around 0200 GMT. A Reuters poll forecast exports in August of -6.0 percent, compared to -8.3 per cent in July.

On the stock market, Seoul shares reversed early gains to edge down as foreigners continuously offloaded local shares, while exporters bolstered the main board on a weak won.

The Korea Composite Stock Price Index (KOSPI) was down 0.2 per cent at 1,880.37 points after gaining as much as 0.6 per cent to 1,894.56. Losers outnumbered gainers by 1.7 to 1. "Valuations divide the share market today as undervalued exporters rise, while shares with high-valuation such as pharmaceutical stocks are corrected ahead of the Fed's rate hike and on concerns over the global economy," said Rhoo Yong-seok, a stock analyst at Hyundai Securities.

The sub-index for pharmaceutical shares underperformed the broad market, down 4.1 per cent. Hanmi Pharm Co Ltd lost 11.2 per cent, and Samsung Pharmaceutical Co Ltd fell 5 per cent.

Market bellwether Hyundai Motor Co Ltd rose 2.3 per cent, and Hyundai Glovis Co Ltd gained 6.2 per cent.

Foreigners were set to extend their selling spree into a 24th consecutive session, offloading a net 68 billion won (S$80.6 million) worth of shares in the main board by midday.

September futures on three-year treasury bonds were down 0.04 points at 109.61.

REUTERS