Seoul: Won, stocks jump as Fed signals slow rate-hike approach
[SEOUL] The South Korean won and shares rose sharply on Wednesday morning after the Federal Reserve kept rates on hold and tempered the pace of future hikes, sending the dollar skidding.
The won stood at 1,104.5 as of 0213 GMT, up 1.4 per cent compared to Wednesday's close of 1,120.1.
The Korea Composite Stock Price Index (Kospi) rose one per cent to 2,055.70 points.
While the Fed signalled it could hike rates by year-end as the labour market improved further, it cut the number of rate increases expected in 2017 and 2018. It also reduced its longer-run interest rate forecast to 2.9 per cent from 3 per cent.
"The won is reacting more to the fact the Fed adjusted its economic growth rate forecast lower in yesterday's meeting, meaning that policy tightening will be done very slowly," said Jeon Seung Ji, a foreign exchange analyst at Samsung Futures.
The currency could strengthen to as high as the 1,080 level, but trading may get volatile in the months leading up to the US presidential election in early November, she added.
As the won strengthened to near 1,100 level, foreign exchange authorities ratchehed up their rhetorics and vowed to take measures to curb any excessive volatility arising from policy changes in the US.
In the stock market, offshore investors were set to mark a fifth straight buying session, purchasing a net 80.9 billion Korean won (S$99.7 million) worth of Kospi shares near mid-session.
Hanjin Shipping shares surged as much as 28 per cent in morning trade on Thursday after the board of Korean Air Lines, its biggest shareholder, approved lending 60 billion won to the troubled container carrier.
Market heavyweight Samsung Electronics Co Ltd rose 1.5 per cent.
Advancing issues outnumbered decliners by 518 to 268.
December futures on three-year treasury bonds gained 0.12 point to 110.81.
REUTERS
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