South Korea won posts biggest daily gain since late 2011

SEOUL: The South Korean won posted its biggest daily gain since December 2011 on Monday after positive global economic data fuelled investor risk appetite and the market saw no change in the near term for local interest rates.

The local currency broke a three-day losing streak to stand at 1,084.6 against the dollar at the end of onshore trade, compared to Friday's domestic close at 1,097.4.

 Its daily gain of 1.2 percent against the dollar was the biggest since Dec. 21, 2011, recouping some of the losses the local currency posted last week.

The won found sturdy support from US payrolls data, which showed employment grew modestly in January and job gains in the previous two months were larger than initially reported.

Solid manufacturing data from China and Europe also bolstered sentiment for riskier assets, further pulling up the won against the dollar, traders said.

The won jumped as strong as 1,083.3 per dollar at midday following comments by Bank of Korea board member Moon Woo-sik to Bloomberg that it is too early for the central bank to act on the recent fall of the Japanese yen against the dollar.

Market participants saw the comments as a signal that the Bank of Korea would not change interest rates, currently at 2.75 percent, to curb the won's rally should the yen weaken further.

The comments were supportive of minutes from January's rate meeting that were published last week, which showed most of the central bank's board members were sceptical about cutting rates to deal with the rising won.

 "The won gained quickly today because of Moon's comments which rendered null and void previous beliefs that weighed down the won," said a foreign exchange dealer in Seoul, referring to caution against possible government intervention in the case of a swift rise in the won against the yen.

Against the Japanese yen, the won gained 0.8 percent on Monday.

The benchmark Korea Composite Stock Price Index was down 0.2 percent. Foreign investors were net buyers of 58.3 billion won ($53.13 million) worth of South Korean stocks on Monday.

Local bonds held steady, with March futures on three-year treasury bonds adding 0.03 points to 106.20.

The yields on the benchmark five-year treasury bonds and three-year treasury bonds both remained unchanged.