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Seoul: Won buoyed by softer tone in Fed minutes, shares rise

[SEOUL] The South Korean won strengthened early on Thursday, as chances of a Federal Reserve rate hike within this year became less certain after its latest minutes showed concerns about US inflation.

The won was further buoyed after President Donald Trump praised North Korean leader Kim Jong Un for deciding not to fire missiles towards Guam, which eased tensions between the two countries.

The won was quoted at 1,136.2 against the US dollar, up 0.5 per cent compared with Wednesday's close of 1,141.5.

"Despite all those mixed views about inflation among Fed policymakers themselves, markets believed the September rate increase was very likely. But the latest minutes now signal that the hike could be delayed to early next year," said Kim Doo Un, a foreign exchange analyst at Hana Financial Investment.

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Mr Kim added that risk measures also edged lower following Trump's praise of the North Korean leader, which raised demand for the local currency.

The spread on South Korea's 5-year credit default swaps now stands at 63.5 basis points, lower than Wednesday's 64.1 basis points.

South Korean shares climbed for a third straight session to a one-week high supported by foreign investors' purchases of local equities.

The Korea Composite Stock Price Index (Kospi) was up 0.5 per cent at 2,359.17 points.

Offshore investors were set to snap a five-day selling streak, adding a net 43.3 billion won (S$51.99 million) worth of Kospi shares to their portfolio near mid-session.

Advancers outnumbered decliners 469 to 343.

South Korea's steel shares gained 3.7 per cent on high expectations of the biggest-ever quarterly earnings for the sector in the July-September period.

Posco rose as much as 4.4 per cent, Hyundai Steel up 3.1 per cent and Dongkuk Steel jumped nearly 6 per cent.

September futures on three-year treasury bonds gained 0.06 point to 109.10.