SEOUL: The South Korean won firmed for a second session early on Tuesday, as dollar momentum cooled and investors warmed to risky assets following Portugal's plan to prevent the collapse of its largest listed bank.
The local currency was quoted at 1,032.6 against the dollar as of 0158 GMT, up 0.1 percent from Monday's onshore close at 1,033.5.
Early trading was slow, however, as investors held tight ahead of the Reserve Bank of Australia's (RBA) policy meeting outcome later in the day, where it is widely expected to keep rates unchanged at 2.50 percent.
"Offshore dollar demand has gotten weaker, but there is resistance above the 1,030 level," said Son Eun-jeong, an FX analyst at Woori Futures in Seoul.
Son said investors would be skittish to aggressively push the won higher, which is expected to trade in a boxed range on Tuesday.
The Korea Composite Stock Price Index (KOSPI) was down 0.6 percent at 2,068.65 points as foreigners and institutions sold local shares for profits.
Some gains in the won were erased and the stock market extended its losses after China's July HSBC services PMI fell to its lowest in nearly 9 years on Tuesday, reflecting a fragile recovery there.
Analysts said the finance ministry's annual tax revision plan will have a positive impact on the stock market after it is released on Wednesday as it will provide more details on how the government aims to shore up the economy through higher wages and dividends.
Offshore investors sold a net 76.7 billion won ($74.36 million) worth of KOSPI shares near mid-session, and
institutions offloaded 47.9 billion won worth.
Most sectors were down, with Samsung Electronics Co Ltd trading 0.6 percent lower and Hyundai Motor Co slipping 0.4 percent.
Outperforming the bourse were SK Telecom Co Ltd, which traded up more than 1 percent and Korea Electric Power Corp, which edged up half a percent.
Decliners outnumbered advancers 432 to 345.
The KOSPI 200 benchmark of core stocks fell 0.6 percent, while the junior KOSDAQ was down 0.5 percent.
September futures on three-year treasury bonds traded up 0.04 points at 106.92.
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