Seoul: Won, stocks slip as Fed flags faster monetary tightening
[SEOUL] The South Korean won and shares slipped on Thursday after the Federal Reserve hiked US interest rates and signalled that a faster pace of monetary tightening is in place for the year ahead.
The South Korean won was quoted at 1,182.0 against the US dollar at 0108 GMT, down 1.05 per cent from its previous close of 1,169.7.
The Korea Composite Stock Price Index (Kospi) fell 0.55 per cent to 2,025.63 points, extending losses from its previous close of 2,036.87.
Markets showed little reaction after the Bank of Korea on Thursday held its policy interest rate steady at a record low for a sixth straight month.
"The selloff in the won is a little more than expected, probably because the Fed said it sees three rate hikes in 2017, which is more than what the markets had in mind," said Kim Doo-un, a foreign exchange analyst at Hana Futures.
"The won could extend losses to 1,210 per US dollar through March next year as the dollar is expected to strengthen further under Trump," Mr Kim said. Republican Donald Trump is set to become US president towards the end of January.
Before onshore trading began earlier on Thursday, South Korean vice finance minister Choi Sang-mok said the government would maintain the highest level of caution against financial market volatility that could increase following the Fed's decision.
Foreign investors sold a net 27.90 billion Korean won's (S$34 million) worth of Kospi shares near mid-session, weighing on the index. Decliners outnumbered advancers by 394 to 361.
December futures on three-year treasury bonds fell 0.18 points to 109.39.
REUTERS
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