SEOUL: The South Korean won retreated after touching its highest level since the 2008 global financial crisis on Monday, amid market talk the authorities had intervened in the market, buying dollars to slow the local currency's ascent.
The talk of dollar-buying came as central bank data on foreign reserves suggested the authorities had loosened their grip on the won to calm public anger over high inflation ahead of key by-elections later this month.
The won ended local trade at 1,086.6 per dollar, up 0.4 percent on the day but far below a session high of 1,084.0, the strongest since Sept. 10, 2008.
"I think the intervention was very well timed as (otherwise) the won's gains would have accelerated," said a domestic bank dealer. "But the won will largely extend gains until a new event is strong enough to turn the course downward."
Foreign exchange officials in the government and at the central bank had no comment on the intervention talk.
Analysts and traders said a further sharp rise in oil prices or a steep decline by the yen against major currencies, or both, could lead send the won lower.
The won continued to receive support from funds flowing into the local stock market, where foreign investors bought a net 173 billion won ($159 million) worth of shares on Monday despite a slight drop in the benchmark KOSPI.
Treasury bond prices were little changed as traders digested steep gains on Friday on weaker-than-expected March inflation and on signs the inflation may be nearing its peak.
The benchmark five-year treasury bond yield ended down 1 basis point at 4.05 percent, while the liquid June-delivery futures on three-year treasury bonds closed up 0.03 points at 103.15.
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