South Korea won snaps 4-days of losses, ignores North Korea nuclear test

SEOUL: The South Korean won snapped a four-day losing streak on Tuesday, boosted by local exporters as traders shrugge
12 Feb, 2013

 

The local currency was quoted at 1,090.8 at the end of onshore trade, up half a percent from Friday's close at 1,095.7. The market was closed on Monday. Seoul shares and local bond futures were also little affected by North Korea's test.

 

"North Korea is not that big of an issue for financial markets anymore unless a full-on war breaks out," said Chung Kyung-parl, a foreign exchange analyst at KEB Futures in Seoul.

 

"The won has built up some resistance to these (provocations) and today it looks like the currency moved as if there never was a nuclear test."

 

After opening nearly flat early on Tuesday, the won steadily made its way up as South Korean exporters sold dollars for contracts, boosting the won.

 

The local currency showed little reaction to news that North Korea had conducted a third nuclear test around midday, while policymakers were quick to convene in emergency meetings to address the issue.

 

"North Korea's provocations can no longer affect our economic fundamentals. This is evident in how markets and credit rating agencies have reacted to previous North Korea-related incidents," said Shin Je-yoon, South Korea's vice finance minister in Sejong City.

 

"But there is a possibility that geopolitical risks will grow depending on how the situation develops over the international community's sanctions and how North Korea will respond."

 

Shin said the government would pay close attention to further developments while officials from the finance ministry, Bank of Korea and the country's financial regulator will meet early on Wednesday to discuss the aftermath of the nuclear test.

 

The benchmark Korea Composite Stock Price Index fell 0.3 percent, while offshore investors were net buyers of 135.3 billion won ($123.5 million) worth of South Korean shares on Tuesday.

 

Local bonds edged up as foreigners bought contracts, while investors were eyeing a South Korean rate meeting on Thursday, where the Bank of Korea is largely expected to hold interest rates steady.

 

March futures on three-year treasury bonds added 0.04 points to 106.42.

 

Yield on the five-year treasury bonds and yield on the three-year treasury bonds both shed 1 basis point each.

Copyright Reuters, 2013

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