SEOUL: The South Korean won edged lower against the dollar early on Tuesday and appeared headed for a fourth day of losses as insurgency in Iraq dented sentiment for riskier assets, while much of the focus shifted towards the two-day US Federal Reserve meeting.
The won was quoted at 1,022.3 against the dollar as of 0230 GMT, down 0.2 percent from Monday's onshore close at 1,020.1.
It traded as low as 1,022.7 per dollar, the weakest intraday level since June 5.
"Trading is quiet across the board before the Fed meeting,"
said a currency dealer at a domestic bank, before adding, "the key is whether rate hike worries will re-emerge rather than the decision over another round of stimulus unwinding."
The broad risk-averse sentiment weighed on the won, but demand by exporters kept its weakness in check, dealers said.
The Fed is expected to announce a further cut to its monthly bond purchasing program, but is not seen raising interest rates until mid-2015.
The Korea Composite Stock Price Index (KOSPI) was up 0.2 percent at 1,997.23 points as of 0230 GMT.
"It's apparent that offshore investors are waiting for the Fed meeting results as they exercise caution, but an unexpected move or a hawkish comment appear unlikely from the meeting as there are question marks regarding the US growth outlook," said Kwak Hyun-soo, a market analyst at Shinhan Investment Corp.
The International Monetary Fund cut its growth forecast for the United States on Monday and said the economy would not reach full employment until the end of 2017, which may allow interest rates to be held near zero for longer than financial markets expect.
Offshore investors sold a net 23.2 billion won ($22.79 million) worth of KOSPI shares by near the mid-session, while domestic institutional and retail investors positioned as net buyers, picking up a combined 27 billion won of shares.
Auto shares gained some momentum as the won's appreciation was put to a halt, with Hyundai Motor Co and Hyundai Mobis Co Ltd rising 0.9 percent and 2.5 percent, respectively.
A stronger won translates into weaker price competitiveness against Japanese rivals for local exporters including auto companies in overseas markets.
World's largest handset maker Samsung Electronics Co Ltd inched down 0.7 percent while steelmaker POSCO slipped 1.2 percent.
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