SEOUL, Mar 21: The South Korean won gave up early gains to close slightly stronger against the dollar on Thursday as foreign outflows from the stock and bond markets and tensions with North Korea offset an improvement in the risk appetite overnight.
The won was quoted at 1,115.7 against the dollar at the end of onshore trade, compared with 1,116.1 at the end of the Seoul session on Wednesday.
The currency was initially boosted by a U.S. Federal Reserve decision to maintain its stimulus plan as well as an easing of fears of a financial meltdown in Cyprus.
But dealers said foreign outflows from the stock and bond markets led to steady dollar demand, keeping the won trapped in a narrow range.
‘It was a difficult day to start taking a position, either up or down,’ one local bank dealer said.
South Korean authorities said earlier Thursday that the hacking attack that brought down three South Korean broadcasters and two major banks originated from a server in China, similar to previous cyber attacks by North Korea.
Combined with threats from Pyongyang of potential strikes against U.S. Military bases in Japan and Guam, dealers said the geopolitical tensions also kept the dollar supported against the local currency for now.
The benchmark Korea Composite Stock Price Index ended down 0.4 percent at 1,950.82. Foreigners were net sellers of 316.8 billion won ($283.82 million) worth of local shares on Thursday.
Local bonds edged higher on speculation that the Bank of Korea may ease policy further this year as well as bets on the won’s future appreciation. Yields on the five-year treasury bonds and three-year treasury bonds each ended down one basis point.
June futures on three-year treasury bonds ended unchanged from Wednesday’s close at 106.81.
(AGENCIES)
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