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Seoul: Won, stocks fall on growing chance of Fed rate hike soon
[SEOUL] The South Korean won plunged more than 1 per cent against the dollar early on Monday after Janet Yellen's comments on Friday raised the chance the Federal Reserve may raise US interest rates soon, and even twice, by year-end.
The won was quoted at 1,124.1 as of 0214 GMT, down 0.9 per cent from the previous close of 1,113.7. It reached as low as 1,128.5, a one-week intraday low.
Ms Yellen suggested that the US economy has strengthened enough for a rate hike while Fed's No 2 policymaker Stanley Fischer hinted on more than one policy tightening before year end.
"The US August job report due this coming Friday will be closely watched by investors for whether a rate hike as early as next month will actually be possible," said Park Sung-woo, a foreign exchange analyst at NH Futures.
He added that the won is unlikely to move much the rest of this week, ahead of the employment data, while dollar-selling at month-end would also keep the currency from falling further.
South Korean shares also edged down on Monday, with the Korea Composite Stock Price Index (Kospi) standing at 2,028.57 points, down 0.4 per cent from its Friday close.
Foreign investors were poised to be buyers for the day, purchasing a net 14.9 billion Korean won (S$18 million) of Kospi shares near mid-session.
Automobile manufacturer Kia Motors Corp dropped more than 2 per cent while SK Chemicals Co Ltd was down 3.6 per cent.
Decliners far outnumbered advancers 678 to 142.
September futures on three-year treasury bonds shed 0.08 point to 110.93.