SEOUL: The South Korean won fell in early domestic trade Tuesday, touching its lowest level in more than two weeks as a growing consensus that the US Federal Reserve will start reducing its monthly bond purchases in September boosted the dollar.
The local currency was quoted at 1,123.5 against the dollar as of 0230 GMT, down 0.7 percent from Monday's domestic close of 1,115.6. It touched an intraday low of 1,123.7, the weakest since Aug. 2.
Though investors are treading cautiously ahead of the July Fed rate meeting's minutes due on Wednesday, the won was largely tracking Asian currencies' continued slide against the dollar.
But the won received some support from continued foreign inflows to the local stock market as well as dollar-selling from exporters looking to convert their contract payments, limiting the extent of the currency's decline.
"It's possible that the dollar-won rate will remain somewhere above 1,120 if other Asian currencies remain weak, but the Kospi is holding its own and there could be some position adjustments at this level," one local bank dealer said, adding that some caution is warranted for the rest of the trading day.
The benchmark Korea Composite Stock Price Index was up 0.2 percent at 1,920.95
September futures on three-year treasury bonds were up 0.03 points at 105.47, recovering some of Monday's decline despite continued selling by foreigners.
Yield on the benchmark 10-year government debt fell to a near 15-month low on Monday on speculation the Fed will start tapering its bond-buying stimulus next month.
Foreigners were net sellers of 202.5 billion Korean won worth of local bonds on Monday, according to the finance ministry, marking the biggest daily outflow since July 30.
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