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Seoul: Won, stocks jump to multi-week highs on Yellen remarks
[SEOUL] The South Korean won and shares leapt to their highest levels in more than a month on Tuesday morning as comments from US Federal Reserve chair Janet Yellen left few prospects for a Fed interest rate hike in coming months.
The won was up 1.6 per cent compared to the previous close of 1,183.6 as of 0222 GMT. It was quoted at 1,164.2 in early trade, its strongest level since May 12.
Ms Yellen gave a largely upbeat assessment of the US economic outlook on Monday and said interest rate hikes would be implemented, but was careful not to give any hints about timing, which markets interpreted as a step back from her previous stance.
"A June rate hike seems impossible for now and the won is expected to extend gains for a few more days," said Jeon Seung-ji, a foreign exchange analyst at Samsung Futures.
She added that the won would not go strengthen beyond the 1,150 level largely due to a possibility that the Bank of Korea might lower interest rates soon.
The BOK holds its monetary policy meeting on Thursday. The minutes from its May meeting showed that at least one board member believes rates should be lowered soon.
South Korean shares rose to a near six-week high, with the Korea Composite Stock Price Index (Kospi) up 1.0 per cent at 2,004.80 points.
Foreign investors were poised to be buyers, purchasing a net 153.4 billion Korean won (S$179 million) worth of Kospi shares near mid-session, buttressing the index.
Market heavyweight Posco gained 6.7 per cent on hopes of higher profits following steel product price hikes.
SK Innovation Co Ltd rose 3.2 per cent.
Advancing issues outnumbered declining ones by 472 to 325.
June futures on three-year treasury bonds gained 0.08 point to 110.50.