S.Korea won up on firmer stocks, FX reserves data
Reuters - 1 hour 1 minute ago
* Foreign stock purchases, reserves data help lift won
* Economic uncertainties trim currency's gains
* Seen unlikely to strengthen past 1,300 level in short term
By Cheon Jong-woo
SEOUL, Jan 5 - The South Korean won rose against the dollar on Monday as foreign investors expanded local stock purchases and after data showed the country's foreign exchange reserves gained in December.
But the won <KRW=> gave up some of its early gains on uncertainties over further improvements in reserves amid a still-troubled global financial environment. That prompted importers to chase dollars for settlements in the afternoon.
The local currency is likely to rise further on continued stock purchases by foreign investors, but its rises are likely to be capped by the slowing economy and concerns over restructuring at local companies, analysts said.
"Given foreigners' stock purchases today, the won is expected to rise a bit more, but the unit is unlikely to strengthen past the 1,300 level soon as everybody is still concerned about the economy and corporate sector," said Jeon Seung-ji, a currency analyst at Samsung Futures Inc.
The South Korean currency was quoted at 1,313.5/4.0 per dollar as of 0600 GMT, compared with Friday's domestic close <KRW=KFTC> of 1,321.0. It gained as much as 2 percent to 1,294.8.
Foreign investors bought a net 334 billion won worth of stocks in the country's main exchange, helping Seoul shares <.KS11> end up 1.40 percent.
They purchased a combined net 303.7 billion won during the previous three consecutive sessions, helping the country's balance of payments improve.
Last year, foreigners sold a combined net 33.6 trillion won in shares, their highest annual net sales ever, putting pressure on the won.
Earlier, central bank data showed South Korea's foreign exchange reserves rose in December, halting an eight-month slide that had hammered the currency and cast doubt on the country's financial stability. [ID:nSEO359371]
Still, the recovery in reserves may be short-lived, analysts said.
"If the global economy remains sluggish, it would remain difficult to roll over foreign currency debt," said Park Sang-hyun, the chief economist at HI Investment & Securities.
Adding concerns over the impact of the financial crisis on the local corporate sector, the country called on domestic banks to identify non-viable corporate clients and push for their swift exit so that the economy could emerge a stronger player at the end of the current global crisis. [ID:nSEO357450]
On the corporate front, Daewoo Shipbuilding & Marine Engineering <042660.KS>, the world's third-largest shipbuilder, said it expected to win new orders worth more than $10 billion this year, compared with $11.8 billion in 2008. [ID:nSEL000422]
0610 GMT 0300 GMT prev close Won <KRW=> 1,313.5/4.0 1,302.0/3.2 1,321.0 Yen/won <JPYKRW=R> 14.2787/88 14.1565/72 14.4455/30 KOSPI <.KS11> 1,173.57 1,171.40 1,157.40
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