South Korea won near 2-wk closing high, bonds firm

SEOUL: The South Korean won scored its best finish in nearly two weeks on Tuesday as the prospects of slowing air attacks on Libya and stabilisation in Japan's quake-damaged nuclear plant eased concerns over risky assets.

Trade was rangebound throughout the day, however, with investors wary of further impacts from the turmoil in the Middle East and North Africa on the world's No.5 crude oil importer.

"The exchange rate appeared to get trapped in the early end of 1,120, thus trade was light," said a local bank dealer.

"Barring additional negative news from Libya and Japan, this kind of trade will likely continue."

The won ended local trade at 1,120.9 per dollar, its strongest close since March 9's 1,115.6.

The dollar/won pair moved less than 0.4 percent against the dollar on the day, compared with last year's average daily volatility of 0.6 percent.

It tested resistance at 1,120, or a 23.6 percent retracement support line drawn between December 2010 and February 2011, after sliding to 1,144 last week, its poorest intraday level this year.

In early trade, government customs data showed South Korean exports rose 26.9 percent in the first 21 days of March from a year earlier, but faster growth in imports sent the trade balance into a $2.32 billion shortfall.

Giving further support to the won, Samsung Engineering announced a $2.76 billion deal to build a offshore gas plant, following Hyundai Heavy Industries' $600 million order from BP.

Government bond prices crept higher, with the benchmark 5-year treasury yield down three basis points to 4.11 percent.

By comparison, yields on shorter maturities in both spot and interest rate swap markets barely moved.

"Now that both negative and positive leads of late have run their course, people have yet to make one-side bets," said a local brokerage trader.

"They are in a wait-and-see mode and the yield curve may steepen this week before turning flatter next week with renewed concerns over prices."