South Korea won hits near 5-month low

SEOUL: The South Korean won touched its weakest level in nearly five months against the dollar on Tuesday after disappointing US economic data pushed investors away from riskier assets.

The local currency was quoted at 1,086.2 against the dollar as of 0225 GMT, down 0.2 percent from Monday's domestic closing level of 1,084.5. It traded as low as 1,089.9 earlier in the day to mark its weakest level since Sept. 9.

The Institute for Supply Management's index for US factory activity fell to an eight-month low in January, while auto sales for the country's top three carmakers fell. The poor numbers triggered fresh concerns about the country's growth momentum and bolstered the dollar.

Dealers said the won pared its initial decline on dollar selling by local exporters, which in turn led to some unwinding of dollar-long positions.

"Offshore players are buying dollars but not as much as initially expected, so we're seeing some stops triggered on dollar-long positions," one foreign bank dealer said.

Dealers and analysts have said that 1,100 could be a key psychological support level for the won, which has fallen nearly 3 percent against the dollar so far this year amid renewed

unrest in emerging markets, the Federal Reserve's continued reduction of bond purchases and concerns about growth in China.

But South Korea's comparatively strong fundamentals - such as its current account surplus and substantial foreign exchange reserves - are seen as buffers that will ward off any major runs against the country's markets and currency for now.

"Considering the won's fundamentals, it may be that the local currency is acting as a proxy to other regional currencies," one local bank dealer said, noting how the won is comparatively more liquid than other emerging market currencies.

"The dollar did not rise as sharply against the won after the US began its tapering than the past, which suggests that there are no major factors for the won to fall in a big way based on just its own merits."

The benchmark Korea Composite Stock Price Index was down 1.5 percent at 1,890.83.