Seoul: Won, stocks down on Fed cues, weak China data; BOK stands pat

[SEOUL] The South Korean won and shares slipped early on Thursday after minutes of the US Federal Reserve's last meeting backed market expectations for a December rate increase.

There was muted reaction in domestic markets to the Bank of Korea's (BOK) widely expected decision earlier in the day to hold rates steady.

But exports data from China - South Korea's major trading partner - came in worse-than-expected and may have hurt risk sentiment broadly.

The won stood at 1,125.3 against the US dollar as of 0218 GMT for the third straight day of losses, down 0.1 per cent compared to Wednesday's close of 1,123.6.

The Korea Composite Stock Price Index (Kospi) was down 0.7 per cent at 2,019.07 points, in line with weak regional markets.

Offshore investors purchased a net 26.5 billion Korean won (S$32.6 million) worth of Kospi shares near mid-session.

Providing some relief, market heavyweight Samsung Electronics Co Ltd, sold heavily in the past three days amid a phone recall crisis, recovered somewhat by 2 per cent.

Web portal Naver Corp lost more than 2 per cent.

Decliners far outnumbered advancers 607 to 184.

"BOK's decision was fully priced in, and therefore had limited impact on the market. The local currency is responding more to the dollar's movement," said Ha Keon-hyeong, an economist at Shinhan Investment Corp.

He said the US dollar could extend gains depending on US economic data in the near term.

The US dollar was boosted on Wednesday by the minutes of the Fed's September policy meeting showing several voting members of the policy committee judged a rate hike would be warranted "relatively soon" if the US economy continued to strengthen.

December futures on three-year treasury bonds gained 0.08 point to 110.70.

REUTERS