Seoul: Won up at 3-1/2-month high as US dollar hit by tax reform doubts; stocks slip

[SEOUL] The South Korean won rose to a 3-1/2-month high on Friday, and was on track for a fourth consecutive day of gains as the US dollar pulled back on perceived lack of progress on the Trump administration's promised tax reforms.

The won stood at 1,132.6 against the US dollar as of 0254 GMT, up 0.4 per cent compared with Thursday's close of 1,137.3. It reached as high as 1,131.7, its strongest level since Nov 9, 2016.

New US Treasury Secretary Steven Mnuchin told Fox Business Network that any policy steps the Trump administration takes would likely have a limited impact this year and told CNBC that he wanted to see tax reform passed before Congress' August recess.

That was in line with comments by other politicians over the past month, but disappointed some investors expecting a quicker timeline on tax reforms.

"What Mnuchin said yesterday disappointed investors who were betting on a strong dollar," said Paik Seokhyun, an analyst at Shinhan Bank.

He said the won could possibly strengthen past the 1,130 level soon as the dollar may remain relatively quiet in the near term.

South Korean shares were set to snap four straight sessions of gains on selling by foreign investors and local institutions.

The Korea Composite Stock Price Index (Kospi) was down 0.7 per cent at 2,097.43 points.

Offshore investors offloaded 30.3 billion won (S$37.66 million) worth of Kospi shares, while institutions sold 10 billion Korean won worth near mid-session.

The sub-index for electric and electronics shares fell nearly 2 per cent as market heavy Samsung Electronics dropped 1.9 per cent and SK Hynix more than 4 per cent.

Samsung said earlier on Friday it will strengthen controls for financial support made to third-parties, after its vice chairman was arrested in a graft scandal that could topple South Korea's president.

Decliners outnumbered advancers 461 to 321.

March futures on three-year treasury bonds gained 0.04 point to 109.53.

REUTERS