SEOUL: The South Korean won slipped along with its Asian peers early on Tuesday as investors treaded cautiously ahead of the US Federal Reserve's two-day policy meeting at which it is widely expected to announce it will begin tapering its stimulus.
The local currency was quoted at 1,086.0 against the dollar as of 0151 GMT, down 0.4 percent from Monday's domestic close of 1,082.2.
The Fed's verdict will be announced when South Korean markets are closed for a public holiday from Wednesday through the rest of the week. They will reopen next Monday.
"Should the (tapering) be more dovish than expected ... the dollar will receive firm support against major currencies as it would signal the beginning of a long exit," Chung Kyung-parl, a foreign exchange analyst at KEB Futures in Seoul, said in a note to investors.
"However, if the results are hawkish, investors will want to take profits from their risk-asset investments very quickly."
Chung added that the won could plunge to 1,120 against the dollar if the Fed scales back its bond-buying programme more than expected.
"With all scenarios in place, there is a 30 percent chance the won will maintain its strength, against a 70 percent chance the won will turn weaker," he said.
The benchmark Korea Composite Stock Price Index was down 0.6 percent, applying some pressure on the won.
September futures on three-year treasury bonds edged up 0.06 point to trade at 105.99, with trading light on a lack of direction-lending catalysts.
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