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S.Korea won at 1-wk high, mkt wary of FX controls
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S.Korea won at 1-wk high, mkt wary of FX controls
Reuters - 32 minutes ago
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* Won up 0.8 pct on record trade surplus
* Some suspect intervention; wary of capital measures
* Seen staying in range with volatility until Fed
By Cheon Jong-woo
SEOUL, Nov 1 - The South Korean won hit a near one-week high against the dollar on Monday as data showed Asia's fourth-largest economy stayed on a solid growth path and boosted expectations for an interest rate increase this month.
Exporters also chased the won <KRW=> for settlements, prompting investors to clear dollar-long positions to stop losses.
But investors remained wary of possible steps by the foreign exchange authorities including dollar-buying intervention and regulations to tackle hot money inflows.
Some dealers suspected the authorities of buying dollars around 1,115 per dollar to check the won's strength.
Earlier, online news outlet Yonhap Infomax quoted an unnamed finance ministry official as saying the government was preparing measures to ease volatility from capital flows within the basic framework of the G20 finance chiefs' agreement made late in October. [ID:nTOE6A0055]
Market players were also reluctant to take big bets amid uncertainty over a fresh round of the Federal Reserve's monetary easing.
Caution will continue to keep the won in a range amid higher volatility, although it is seen staying on a bullish trend on the brighter economic outlook, analysts and dealers said.
"No one will hold major positions until the Fed's announcements. But any falls in the won along with assets in other emerging markets will give investors chances to buy it on dips," said Jeong My-young, a currency strategist at Samsung Futures Inc.
The South Korean unit ended local trade up 0.8 percent at 1,116.6 per dollar from Friday's domestic close <KRW=KFTC> of 1,125.3.
The local currency strengthened to as firm as 1,115.5, the strongest since Oct 26.
"The massive trade surplus pushed up the won. But it is risky to build up big positions before the Fed and the authorities were seen stepping in the market from 1,115," said a foreign bank dealer.
South Korea posted a record monthly trade surplus of $6.91 billion with exports in October up a stronger-than-expected 29.9 percent from a year earlier. The trade surplus this year is seen higher than last year, a deputy economi minister also said. [ID:nTOE6A001Z] [ID:nTOE6A0032]
Annual consumer inflation in October accelerated to its fastest in nearly two years, which may boost expectations for an interest rate rise later this month.
Foreign investors remained net sellers of local stocks but reduced size of the sales to 4.9 billion won with the benchmark KOSPI <.KS11> ending up 1.69 percent.
Foreigners dumped a net 340.6 billion won in the previous session.
Close 0105 GMT Prev close Won 1,116.6 1,118.5/8.9 1,125.3 Yen/won *13.8769/866 13.8703/863 13.9452/529 KOSPI 1,914.74 1,895.71 1,882.95 * As of 0600 GMT (Additional reporting by Lee Soo-jung; Editing by Jacqueline Wong)
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