SEOUL: The South Korean won was headed for its biggest daily loss against the dollar in three weeks on Monday as suspected intervention by Seoul's foreign exchange authorities late last week sparked buying of the US currency on dips.
The won was quoted at 1,024.4 against the dollar as of 0250 GMT, down 0.4 percent from Friday's onshore close at 1,020.1. A 0.4 percent fall on the day would be the biggest since a 0.6 percent loss on May 14.
"Some dollar-short plays are possible at the current level. However, that could prompt short covering in the dollar, and further weaken the won in the afternoon," a currency dealer at foreign bank said.
On Friday, the local authorities were spotted placing robust dollar bids in the spot market on two different occasions to stem the won's appreciation, securing the session's closing price above the 1,020 level.
Also keeping the won weaker was the dollar's broad gain against a basket of currencies, as the euro came under pressure as the market braced for further stimulus measures from the European Central Bank this week.
Meanwhile, Seoul shares nudged higher, with foreign investors continuing their buying streak, as an upbeat factory activity survey from China offset weak South Korean data.
The Korea Composite Stock Price Index (KOSPI) was up 0.1 percent at 1,997.63 points as of 0250 GMT, with heavyweights Samsung Electronics Co Ltd and Hyundai Motor Co up 0.2 percent and 0.9 percent, respectively.
"China's improving factory activity figures have been pleasant news for investors, but much of the movements will be limited prior to the European Central Bank meeting in a holiday shortened week," said KDB Daewoo Securities market analyst Park Seung-young.
South Korean financial markets will be closed on Wednesday and Friday for elections and Memorial Day, respectively.
"Anything less than a quantitative easing by the ECB alongside an interest rate cut would prompt a correction in the priced-in expectations," Park added.
In May, South Korean exports fell the most in eight months and factory activity slowed to a nine-month low, hinting at a softening recovery in Asia's fourth-largest economy.
But data from China, South Korea's largest export market, showed that factory activity in that country expanded at its fastest pace in five months in May due to rising new orders.
Offshore investors purchased a net 100 billion won ($98 million) worth of KOSPI shares by midday, on track to extend their buying streak to a 15th session.
Revised figures from the bourse operator showed that foreign net buying on Friday totalled 31.6 billion won worth, versus preliminary figures showing net selling of 12.9 billion won.
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