SEOUL: The South Korean won edged higher in domestic trade on Monday, benefitting from the euro's gains against the dollar, but concerns about additional intervention by local authorities to slow the currency's appreciation continued to weigh.
The local currency was quoted at 1,085.5 against the dollar at the end of onshore trade, compared with 1,086.1 at the end of the Seoul session on Friday.
The euro reached a one-month high against the dollar on hopes that Greece will soon be able to receive more bailout money. This, along with positive indicators from China and Germany, lifted the local currency against the US unit.
But dealers said the market remains wary of provoking a major intervention by the local foreign exchange authorities. A finance ministry official also told Reuters on Monday that the authorities were likely to announce a reduction in the maximum amount of currency derivatives that banks can hold on their books sometime this week.
"There was steady support for the dollar around the 1,084 mark, which is suspected to be the authorities intervening," a currency dealer said.
Another local bank dealer said the market was trading in a narrow range as investors were waiting to assess how large the cap on banks' derivative trading positions would be following the authorities' revision.
The finance ministry official said the scope of the reduction had not been determined yet.
The benchmark Korea Composite Stock Price Index ended down 0.2 percent at 1,908.51. Foreigners were net buyers of 24.1 billion won ($22.19 million) worth of local shares on Monday.
Local bonds edged higher, rebounding from recent losses as foreigners turned net buyers of futures contracts. December futures on three-year treasury bonds ended up 0.06 points at 106.09.
The yield on the benchmark five-year treasury bonds fell by one basis point from Friday's close, while the yield on the three-year treasury bonds fell by two basis points.
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