Korean Won Strengthens, Reversing Loss, as Equities Extend Gainsby
‘Mini swings’ in won seen until Fed meeting: Hyundai Futures
Overseas funds purchase Korean equities for a 12th day
The won reversed an early decline to close higher as South Korean equities rallied on the back of foreign buying.
The currency extended its advance in July to 1.5 percent, the best performance among Asian peers. Foreign investors purchased Korean equities for a 12th consecutive session, the longest buying streak since April, 2015. The won is likely to be volatile in the run-up to the Federal Reserve’s policy decision, said Chung Sung Yoon, a currency analyst at Hyundai Futures Corp. in Seoul. That comes early on Thursday in Asia.
"The gains in stocks amid continued foreign buying has buoyed the currency market as well," Chung said. "We will see mini swings in the currency until investors have a clearer picture of the Fed’s monetary policy stance," Chung said, adding that the market’s focus was on the possibility of a rate increase as early as September.
The odds of a rate hike by year-end are still less than 50 percent, even though they have risen from 12 percent at the start of the month.
The won rose 0.2 percent to 1,134.95 per dollar as of the 3 p.m. close in Seoul, prices from local banks compiled by Bloomberg show. It earlier weakened to as low as 1,143.02 per dollar, where near-term resistance appear to have formed, Chung said.
The Kospi index of Korean stocks advanced for a second day, closing 0.8 percent higher for the biggest gain in two weeks.
South Korea’s government bonds were little changed, with three-year yield at 1.22 percent, while that for the 10-year note was 1.41 percent, exchange prices showed.