Seoul: Won drops to a 5-week low as solid US data lifts US dollar

[SEOUL] The South Korean won slipped to a five-week low early on Friday as the US dollar bounced in the wake of strong US economic data, backing the Federal Reserve's interest rate increase this week and its signal to keep tightening policy.

The won was quoted at 1,130.4 against the US dollar as of 0225 GMT, down 0.6 per cent versus Thursday's close of 1,124.1. The currency briefly touched 1,131.3, the weakest intraday level since May 11.

"Though the Fed seems really confident about US economic growth, market players are holding mixed views on how long this growth phase would last, causing more volatility in the currency," said Jung Sung-Yoon, an analyst at Hyundai Futures.

Mr Jung expects currency volatility to last for a while. The won was poised to end the week down, a third straight declining week.

US dollar bulls were cheered by Thursday's run of upbeat US economic data, including initial jobless claims for the week ended June 10, as well as the June readings of the New York Fed's Empire State business conditions index and the Philadelphia Fed business conditions index.

South Korean shares edged down with the Korea Composite Stock Price Index (Kospi) off 0.1 per cent at 2,359.04 points.

Offshore investors were set to be net sellers, offloading 50.2 billion Korean won (S$61.44 million) worth of Kospi shares near mid-session.

Market heavyweight Naver Corp lost 1.4 per cent while SK Hynix was down one per cent.

Decliners outnumbered advancers 454 to 354.

June futures on three-year treasury bonds shed 0.06 point to 109.52.

REUTERS