South Korean won off 8-month low, global volatility eyed

SEOUL (BestGrowthStock) – The South Korean won cut some of its early 1.6 percent decline against the dollar by late Monday morning as regional stock markets rebounded. A speech by the South Korean president on North Korea had little impact.

The won remained under pressure as global investors unwound long positions on Asian currencies on concern about the fallout on the region’s economies from the eurozone’s debt problems.

The won was quoted at 1,207.6/7.9 per dollar at 0230 GMT after earlier falling to 1,220.0 per dollar, its lowest since mid-September last year, from Thursday’s domestic close of 1,194.1.

The local financial markets were closed on Friday for a public holiday, and the won’s early movements reflect a sell-off in offshore trading since Thursday.

“Asian currencies are showing significantly increased volatility today and the won is fluctuating in line with the regional trends,” said Jeong My-young, a foreign exchange strategist at Samsung Futures.

In a nationally televised speech, President Lee Myung-bak demanded that North Korea apologize for the sinking of a naval ship that has pushed tensions on the peninsula to the highest in years, but his rhetoric came largely in line with expectations.

Traders expressed worries that heightened tensions with the North could spark a flight of foreign funds out of South Korean financial assets.

Seoul’s main stock market index (.KS11: ) reversed from an early decline to rise 0.3 percent by 0230 GMT, in line with a rebound in the regional markets.

Foreign investors were net buyers in early trade but turned into sellers of a net 39 billion won ($32 million) worth of shares on the main board, extending their net-selling streak into a sixth session.

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South Korean won off 8-month low, global volatility eyed