Thursday, 03 January 2013 12:53
SEOUL: The South Korean won rose to a fresh 16-month high on Thursday on large dollar sales from exporters seen near the end of onshore trade, breaking free of a tepid session tempered by fears of intervention by foreign exchange authorities.
The won was quoted at 1,061.5 against the dollar at the end of domestic trade on its seventh consecutive day of gains, compared with Wednesday's close at 1,063.5.
Its closing level, which was also the intraday high, was the strongest against the greenback since early September 2011.
The won had lingered close to Wednesday's closing level through most of Thursday's session as nearly equal bids for it and the dollar were seen from Korean exporters and importers.
Comments made on Wednesday by finance ministry officials against excessive bets on the won's appreciation also kept many investors from playing big positions early on Thursday.
Finance Minister Bahk Jae-wan had warned near the close of trade on Wednesday that foreign exchange authorities were concerned about the won's rise and that the government could take action to stem its strength.
Despite that warning, large bets for the won from exporters near the end of trading sent the won to its fresh high.
"Some bets on the dollar from local importers seemed to trigger dollar-buying today but those positions were dashed after exporters started buying the won," a bank dealer said.
The benchmark Korea Composite Stock Price Index finished down 0.6 percent as automakers slumped on fears a strong won would sap profits. Foreign investors picked up a net 99.4 billion won ($93.46 million) worth of South Korean stocks on Thursday.
Korean bonds jumped as investors continued to bet on additional rate cuts by the Bank of Korea to boost growth, with offshore investors gobbling up contracts.
March futures on three-year treasury bonds rose 0.21 points to 106.17.
Yields on the benchmark five-year treasury bonds slid 7 basis points to 2.91 percent, while the yield on three-year treasury bonds fell 5 basis points to 2.77 percent.
Copyright Reuters, 2013