SEOUL: The South Korean won fell slightly on Wednesday, investors hesitant about taking bets on the currency just a day after the government tightened foreign exchange regulations to stem capital flows into domestic markets.
The local currency was quoted at 1,086.5 against the dollar at the end of local trade, compared to Tuesday's domestic trading at 1,084.1.
Market participants said local exporters have begun to sell dollars for month-end settlements, but caution remains high as market smoothing by government authorities was spotted during intraday trade on Wednesday.
"We're starting to see dollars from exporters but even with this demand for the won it's going to be difficult for the currency to rise easily from wariness against government intervention," said a local bank dealer in Seoul.
The finance ministry left the door open for further policy changes after it said on Tuesday that ceilings on currency derivatives holdings and the cap for foreign bank branches will be both cut to mitigate risks posed by capital movements.
The won has gained 9 percent against the dollar so far over the past six months and shot up 14 percent against the Japanese yen, that export-reliant South Korean companies now point to it as a chief concern for their future business.
The benchmark Korea Composite Stock Price Index ended down 0.7 percent as foreigners offloaded 264.7 billion won ($244.17 million) worth of South Korean stocks.
December futures on three-year treasury bonds rose 0.06 points to 106.09 on the stock market's fall in tepid trading.
Yield on the benchmark five-year treasury bonds fell 2 basis points to 2.90 percent, while yield on the three-year treasury bonds shed 1 basis point to 22.83 percent.
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