SEOUL: The South Korean won edged up against the dollar in thin domestic trade on Monday as expectations for a prolonged period of monetary stimulus in the US and Japan boosted the currency.
The local currency was quoted at 1,072.5 against the dollar at the end of onshore trading, compared with 1,074.6 at the end of the Seoul session on Friday.
Japan's conservative Liberal Democratic Party took power in a landslide general elections victory on Sunday, boosting expectations for greater monetary easing in a bid to push the economy out of its decades-long slump.
This, in turn, weighed on the yen's value against other major currencies and the won. The US Federal Reserve's promise last week to keep rates near zero until unemployment fell to 6.5 percent also weighed on the dollar against the won and other Asian currencies.
But dealers said trading was subdued with many investors having already closed their positions as the year draws to a close.
Fears of local foreign exchange authorities resuming their intervention of recent weeks to slow the won's gains also kept investors cautious.
"It's highly likely that the local authorities will provide strong support for the dollar, if only because of the yen/won rate's decline," one local bank dealer said.
Japan is a key competitor to South Korean exporters, and the yen's recent depreciation has been a source of worry for local manufacturers.
The benchmark Korea Composite Stock Price Index ended down 0.6 percent at 1,983.07. Foreigners were net buyers of 157.8 billion won ($146.82 million) worth of local shares.
Local bonds fell slightly, tracking weak leads from U.S Treasuries. Yield on the benchmark five-year treasury bonds rose by 2 basis points, while yield on the three-year treasury bonds rose by one basis point.
The lead December futures on three-year treasury bonds ended unchanged at 105.91. This contract is scheduled to expire on Tuesday.
Center>Copyright Reuters, 2012
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