SEOUL: The South Korean won hit its strongest level in almost six years on Thursday morning, buoyed by demand from exporters for settlements and stop-loss dollar selling from offshore funds while local stocks were little changed.
The local currency was quoted at 1,035.5 against the dollar as of 0252 GMT, up 0.6 percent from Wednesday's onshore close at 1,041.4.
However, the won's gains were tempered by suspected dollar buying by South Korean foreign exchange authorities to curb the rapid pace of the currency's appreciation and as South Korea's new central bank chief said it was watching foreign exchange markets for excessive moves on herd behaviour.
"Despite the strong dollar-short bids from offshore funds, suspected bids by the local authorities helped form resistance to stop further appreciation in the won," a currency dealer said.
Earlier in the session, the won climbed as high as 1,031.4 against the dollar, its strongest since Aug. 12, 2008, prompting a senior finance ministry official to warn about the spike in the value of the won.
In the stock market, Seoul shares erased their early gains as weaker-than-expected Chinese export data offset positive leads from Wall Street.
The Korea Composite Stock Price Index (KOSPI) was flat at 1,998.61 points as of 0252 GMT after scaling as high as 2,008.98, its strongest since Jan. 2. China's exports fell for the second straight month in March, underscoring concerns about weak manufacturing in the world's second-largest economy. Shares in Wall Street rose more than 1 percent overnight after the latest minutes of the US Federal Reserve's policy meeting suggested the Fed may be more cautious towards raising interest rates than markets had previously thought.
Heavyweight exporters faced sell-off pressures due to the local currency's rapid strength, as investors turned wary over weakening price competitiveness in overseas market.
Automakers Hyundai Motor Co and Kia Motors Corp dropped 1.9 percent and 2 percent, respectively.
Autoparts maker Hyundai Mobis Co Ltd declined 3.7 percent.
Foreign investors net purchased 67.3 billion won ($64.6 million) worth of KOSPI shares near the mid-session, headed for their 12th straight session of net buying.
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