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Seoul: Won, stocks recover despite deepening political crisis
[SEOUL] The South Korean won and shares recovered ground on Thursday, despite a deepening scandal rocking the government of President Park Geun Hye, who a day earlier named a new prime minister and finance minister.
Prosecutors on Wednesday asked a court for a warrant to arrest Choi Soon Sil, Ms Park's old friend at the centre of the scandal, and are seeking to charge her with abuse of power and attempted fraud, court and prosecution officials said. Mrs Choi was detained late on Monday.
Prosecutors have also detained a former presidential aide An Chong Bum, and a long-time friend of President Park, and said they are looking into allegations that he forced South Korean conglomerates to donate funds to non-profit foundations using their connections with the president.
Amid the swirling scandal, the Blue House named Financial Services Commission Chairman Yim Jong Yong as finance minister and deputy prime minister on Wednesday.
Mr Yim, who replaces incumbent minister Yoo Il Ho, has been well-regarded by policy-makers and market participants in his current role.
Kim Byong Joon, a senior presidential secretary during former president Roh Moo Hyun's administration, is expected to replace Hwang Kyo Ahn as prime minister.
Yet for all the domestic political turbulence, the won erased some of its recent losses to stand at 1,142.3 per US dollar as of 0323 GMT, up 0.7 per cent compared to Wednesday's close of 1,149.8.
"Though the won is strengthening for now, it had slid most of yesterday, and the upperside, which is around the 1,140 level, will likely be capped," said Jung Sung Yoon, a foreign exchange analyst at Hyundai Futures.
Dealers said the won's recovery was helped by the US dollar easing against major currencies, due to investors' concerns about the uncertain outcome of the US election and prospect of US interest rates being increased in December.
"Investors are looking more into the offshores issues like the coming US election and Federal Reserve's December policy decision, just because it is still hard to predict how this political scandal inside the country will unfold," said Kim Doo Un, a foreign exchange analyst at Hana Futures.
The Australian dollar's gains also gave moderate support for emerging markets in Asia amid remaining market jitters.
The Korea Composite Stock Price Index (Kospi) was up 0.2 per cent at 1,975.04 points.
Offshore investors were set to be small net sellers of Kospi stocks.
Market heavyweight Samsung Electronics Co Ltd lost 1.6 per cent while LG Electronics Inc gained 1.3 per cent.
Gaining issues outnumbered losing ones 572 to 237.
December futures on three-year treasury bonds gained 0.04 point to 110.31.