The won ended local trade at 1,051.1 per dollar, versus Monday's domestic closing rate of 1,056.2.

It has moved around 1,050 for almost a week.

"End of month dollar-supply overflow and a strong euro supported the won heavily," said a foreign banker in Seoul.

"Intervention dollar bids from the financial authorities were suspected late in the market, but on a smaller scale than what was witnessed over the weekend."

In addition to the unease over the US debt situation, a rebound in Seoul stocks also helped prop up the won. South Korea's KOSPI index climbed 0.85 percent on Tuesday at the end of daily trade.

Treasury bond prices fell on heavy selling by foreign investors following data showing higher inflation expectations.

Inflation expectations in South Korea rose in July, a survey from the central bank showed, bolstering the case for a rate rise.

Adding to inflationary pressures, the South Korean government announced a long overdue hike in electricity tariffs.

The benchmark 5-year treasury bond yield added 2 basis points to 4.02 percent while the liquid 3-year treasury yield also gained 2 basis points to 3.84 percent. September futures on 3-year treasuries dropped 0.19 points to 102.96.

Copyright Reuters, 2011