SEOUL: The South Korean won held near a three-year high against the dollar on Monday, supported by dollar sales related to the sale of a stake in KB Financial Group , parent of the country's biggest lender.
Poor US jobs data, which came in short of even the lowest forecasts, further weakened demand for risky assets, softening the won currency, dealers said.
The won ended local trade at 1,057.8 on Monday, down slightly from its previous close of 1,057.0 on Friday.
Disappointing U.S labour data and a weak euro briefly pushed the won to a session low of 1,062.5 before it was offset by heavy foreign capital inflows from stock and bond purchases towards the close.
Foreign investors were a net buyer of South Korean stocks for a ninth consecutive session, bringing total purchases for the period to 3.8 trillion won.
The won was also bolstered by dollar sales from foreign investors who participated in the $1.7 billion stake sale in KB Financial Group.
Dealers estimate that about $1.2 billion-worth of KB shares sold last week went to foreign investors.
"Economic conditions point to a weakening won but there is a large quantity of dollars on offer on the market, which many speculate may be linked to the KB share sale," a local trade banker said.
Treasury yields dropped on growing expectations of a hold in the policy interest rate this week.
A large majority of bond market traders forecast the Bank of Korea to keep the base rate on hold at 3.25 percent on Thursday, following a surprise rise in June, a survey of traders and analysts found.
The yield on the benchmark five-year treasury bonds closed down four basis points at 4.04 percent. Finance minister Bahk Jae-Wan raised concern about growing demand-led inflation, reaffirming combating inflation as a policy priority.
The government sold all of a planned 1.60 trillion won in five-year treasury bonds at an average yield of 4.06 percent.
The Bank of Korea sold 1.1 trillion won worth of 91-day MBS bonds at a rate 3.48 percent, and one-year bonds totalling 790 billion at 3.77 percent on Monday.
Copyright Reuters, 2011
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