SEOUL: The South Korean won gained modestly against the dollar on Wednesday morning, following a local foreign exchange official's remarks raising fears of possible dollar-buying intervention to stem the won's strength.
The local currency was quoted at 1,016.1 against the dollar as of 0245 GMT, up 0.1 percent from Tuesday's onshore close at 1,017.2. The won hit 1,015.5 per dollar on Tuesday, the strongest level since Aug. 7, 2008.
"The market is relatively quiescent with trading volume being subdued," said a currency dealer at a domestic bank.
On Tuesday, media reported that authorities would inspect bank dealing activities for one-sided movements near the market close, but a foreign exchange official told Reuters there were no plans for inspections, though the factors behind surges in dollar/won trading near the end of onshore trade were under scrutiny.
The comment reaffirmed the local authorities' concern over a sharp one-sided appreciation trend in the won. The won has strengthened 3.8 percent versus the dollar so far this year, one of the fastest-appreciating currencies in the region.
South Korean shares eked out gains as the market digested the previous session's gains, while shrugging off the results of MSCI's annual classification review.
The Korea Composite Stock Price Index (KOSPI) was up 0.1 percent at 2,013.56 points as of 0245 GMT after posting its best daily percentage gain in four weeks.
The equity index provider MSCI on Tuesday said South Korea's index will be removed from its review list of country indexes proposed for potential reclassification to developed markets.
MSCI cited what it said were was the absence of any significant improvements in key areas that impeded market access. South Korea, alongside Taiwan, has been on the review list since 2009.
The index provider, however, said the South Korea and Taiwan indexes could be restored to the review list as soon as there were meaningful improvements.
"Investors are rather focusing on China A-shares being snubbed from emerging market classification by MSCI.
The decision shed concerns about possible capital outflows from the market as part of rebalancing within the emerging market index," said Hanyang Securities analyst Lim Dong-rak.
MSCI placed China's mainland based A-shares into a distinct standalone category.
"This index and the associated regional and global combinations can be used as benchmarks by global investors with QFII and RQFII allocations," MSCI said in a statement.
Foreign investors purchased a net 28 billion won ($27.56 million) worth of KOSPI shares near mid-session, underpinning the main index.
According to the bourse operator, foreigners have brought in more than 3.3 trillion Korean won during a 19-day net buying spree.
DRAM memorychip maker SK Hynix Inc slipped 0.6 percent on profit taking after rising 2.7 percent in the previous session. Autoparts maker Hyundai Mobis Co Ltd rose 2.1 percent on bargain hunting following a 1.4 percent drop on Tuesday.
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