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Seoul: Won nears 3-month low on US rate hike fears, stocks dither

Monday, October 17, 2016 - 11:16
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The South Korean won slumped early on Monday as positive US economic data strengthened views that the Federal Reserve will hike interest rates in December. The won also caught a chill from a US treasury currency report that kept South Korea on its monitoring list.

[SEOUL] The South Korean won slumped early on Monday as positive US economic data strengthened views that the Federal Reserve will hike interest rates in December. The won also caught a chill from a US treasury currency report that kept South Korea on its monitoring list.

The won stood at 1,140.7 against the US dollar as of 0223 GMT, 0.8 per cent weaker than its previous close of 1,132.1. It touched its weakest intraday level since July 26 of this year.

Data late last Friday showed US retail sales rebounded in September amid a surge in motor vehicle purchases and rise in discretionary spending, while other data also suggested a pickup in inflation.

"There will be a slowdown in the won's movement once it extends falls past the 1,140 level, but it is largely expected to stay weak due to growing wariness in the market over the Fed's pending rate hike," said Jung Sung Yoon, a foreign exchange analyst at Hyundai Futures.

Mr Jung added that the US Treasury's comment about South Korea in its currency report over the weekend was also impacting the won short-term.

The US Treasury kept China, Japan, Germany, South Korea and Taiwan on the monitoring list though it said none of the six countries met the standard for enhanced scrutiny under a new trade enforcement law passed in 2015.

South Korean shares edged down with the Korea Composite Stock Price Index (Kospi) standing down 0.1 per cent at 2,021.36 points.

Offshore investors were set to be net buyers, purchasing 59.8 billion Korean won (S$74.69 million) worth of Kospi shares near mid-session.

Shares of LG Chem Ltd, South Korea's largest chemical company, gained 1.3 per cent after it said on Monday it would spend 287 billion won to boost ethylene production at its Daesan naphtha plant by 2019.

Automobile manufacturer Hyundai Motor Co rose more than one per cent.

Decliners outnumbered advancers 513 to 272.

December futures on three-year treasury bonds shed 0.11 point to 110.60.

REUTERS