Seoul: Won slides to 4-month low as US policy uncertainty roils emerging markets

[SEOUL] The South Korean won fell to its lowest level in more than four months on Friday as investors turned away from riskier assets due to increased uncertainties about US fiscal and monetary policy under President Donald Trump.

Soaring US bond yields since Mr Trump's election on Wednesday have sparked concerns that investors could pull out funds from emerging countries in search of higher returns.

An expected US interest rate hike next month also has spooked investors, as worries grow that any pickup in inflation due to stronger government spending under Mr Trump could force the Federal Reserve to raise rates faster than expected.

The won was quoted at 1,168.4 to the US dollar as of 0219 GMT, down 1.6 per cent from the previous close of 1,150.6. It was the lowest level since June 29, 2016.

South Korean shares also fell as foreign investors dumped stocks. The Korea Composite Stock Price Index (Kospi) stood at 1,987.34 points, down 0.8 per cent.

South Korea's central bank kept rates unchanged for a fifth straight month on Friday amid the upswell of global uncertainty and a political scandal involving President Park Geun Hye, but the decision was widely anticipated.

"Such wide-ranged movement may crop up at any time in South Korean markets until Mr Trump's new government settles down during the first half of next year," said Kim Doo Un, a foreign exchange analyst at Hana Futures.

Mr Kim added the market is cautiously predicting that the won might touch the 1,210 level at the lowest.

Offshore investors were set to be sellers, offloading a net 323.1 billion Korean won (S$390.04 million) worth of Kospi shares near mid-session, weighing on the index.

Market heavyweight Samsung Electronics Co Ltd was down nearly 3 per cent while LG Electronics Inc lost more than 2 per cent.

December futures on three-year treasury bonds shed 0.05 point to 110.13.

REUTERS