The won finished domestic trade at 1,060.9 per dollar, compared with Friday's close of 1,058.1.
The South Korean currency has advanced 7 percent on the year to date, making the best performer among emerging Asian currencies, but it has retreated 0.65 percent from its 34-month high of 1,054.0 set last week.
Every rise in the dollar/won rate above 1,060 prompted dollar offers from exporters, keeping daily trade stuck between 1,058 and 1,063.
With global uncertainties growing, analysts have started to scale back expectations of further tightening, with a number looking for just one 25-basis-point raise in the 7-day repurchase agreement rate for the remainder of the year.
The Bank of Korea nudged up its 2011 inflation forecast to the top ceiling of its 2-4 percent band last Friday, while lowering its economic growth projections. It kept the policy interest rate on hold at 3.25 percent last Thursday after a surprise hike in June.
The yield on the 10-year treasury bond eased 2 basis points to close at 4.15 percent, near a 9-month low, after the finance ministry sold a planned 1.6 trillion won in 10-year treasury bonds at an average yield of 4.16 percent. That was 10 basis points lower than in the previous month's sale.
The 3-year treasury yield added one bp to close at 3.69 percent.
"Considering the current price levels, selling must outweigh bids," said a local brokerage bond dealer. "But external factors and ample demand still support the bond market."
Copyright Reuters, 2011