South Korea won pares intraday losses on Japan

Jan 22, 2013

 

SEOUL: The South Korean won closed onshore trading slightly up against the dollar on Tuesday after a volatile session that was heavily influenced by a Bank of Japan announcement it would make an open-ended commitment to its asset buying scheme.

 

The local currency stood at 1,062.3 per dollar at the end of onshore trade, a day after the won recorded the sharpest daily decline in four months to close at 1,062.9.

 

Daily trade in the won stood at roughly 15.6 billion dollars worth on Tuesday, making it the second-largest on record since 2008.

 

The won had weakened to 1,067.9 against the dollar on Tuesday, the lowest intraday level since Dec. 28 last year, as investors covered short positions in the dollar on expectations of fiscal easing by the Bank of Japan.

 

Market participants said the won was also pressured by dollar purchases from local importers.

 

However, after the Bank of Japan and the country's new government promised a "regime change" in macro-economic strategy and doubled its inflation target to 2 percent, the won pared losses with investors clearing long dollar positions.

 

Dollar sales from local exporters also helped buoy the won towards the end of onshore trade.

 

"The recent speed at which the won had been appreciating against the dollar was a bit overshot," said a bank dealer in Seoul.

 

"Now that the won has naturally moved down to the 1,060 won range, it will stay there for a considerable amount of time."

 

The benchmark Korea Composite Stock Price Index ended up half a percent.

 

Local bond prices found support from the Bank of Japan's decision to actively boost its economy, with March futures on three-year treasury bonds adding 0.04 points to 106.33.

 

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

 

Source: Business Recorder