SEOUL: The South Korean won fell to a one-week low in domestic trade on Friday, weighed by offshore players' dollar-buying after weak economic indicators from the US and the euro zone undercut riskier assets.
The local currency was quoted at 1,092.2 against the dollar at the end of onshore trade after falling as low as 1,092.4 its weakest since Nov. 9.
This represented a 0.5 percent fall from Thursday's domestic close of 1,086.7, the sharpest drop since Sept. 20.
Dealers said offshore players continued to bid up the dollar against the won amid renewed risk aversion, with data overnight showing the euro zone slipped back into recession and Hurricane Sandy had undermined the US economy.
The dollar's sustained rise against the won triggered short-covering on the currency, while some local banks began building dollar-long bets, leading to a late spike for the dollar towards market close.
"The pace of the dollar's appreciation accelerated on importer demand and short-covering," a local bank dealer said, adding that current external conditions will likely see more dips for the won.
Exporters continued to sell dollars throughout the session to convert their contract payments, but dealers said that supply was neutralized by a spike in offshore bids for the won.
"Too much good news is priced into the Asian currency outlook at present," Westpac Bank said in a report, adding it is only a matter of time before the won comes under additional selling pressure.
The benchmark Korea Composite Stock Price Index ended down 0.5 percent at 1,860.83. Foreigners were net sellers of 138 billion won ($127 million) worth of local shares on Friday.
Local bonds rose amid continued risk aversion, with the lead
December futures on three-year treasury bonds closing up 0.04 points at 106.27.
Yields on the benchmark five-year treasury bonds and three-year treasury bonds each fell by one basis point from Thursday.
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