The Korean won extended its gains Friday, as markets remained cautious over possible action by forex authorities after their hard-line verbal intervention boosted the currency in the previous session.
The won closed daytime trading at 1,440.3 per dollar, strengthening 9.5 won from the previous session’s daytime close. It marked the strongest level at a daytime close since Nov. 4, when the currency ended at 1,437.9 per dollar.
During the morning session, the won briefly strengthened to 1,429.5 per dollar, marking its first move into the 1,420-won range in nearly two months. The last time it traded at that level was Nov. 3, when it touched 1,425.8 per dollar.
After opening Seoul trading at 1,449 per dollar, the won briefly weakened to 1,454 before reversing course, as markets remained cautious over potential intervention by local forex authorities.
On Wednesday, local forex authorities issued a rare hard-line verbal intervention, signaling a tougher stance against persistent forex volatility.
“The market will soon see that the series of meetings held over the past week or two and the rollout of measures by individual ministries and agencies were part of an effort to put the situation in order,” the statement said.
The government also rolled out a set of incentives aimed at curbing overseas stock investment by individuals.
With markets swiftly reacting to the measures, the won closed daytime trading at 1,449.8 per dollar on the day, gaining 33.8 won from the previous session. It was the first time the won strengthened below the 1,450 won barrier since Nov. 6.
“The authorities signaled a strong determination not to allow the exchange rate to approach the 1,500-won level, dampening market expectations (of a further depreciation of the won),” NH Investment & Securities analyst Kwon Ah-min said.
“Even if the won settles in the mid-1,400s by year-end, there remains a strong possibility of further pressure to push the currency toward the low-1,400s early next year.”
Foreign investors snapped up shares worth 1.78 trillion won ($1.2 billion) on the benchmark Kospi on the day, further strengthening the local currency. The won also gained support from growing expectations that the National Pension Service has resumed currency hedging.
silverstar@heraldcorp.com
