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The South Korean won fell on Thursday morning, beaten back by a broad rally in the dollar as the US Federal Reserve gave the clearest indication yet of its intention to normalise interest rates sometime next year.
The won was quoted at 1,103.8 to the dollar by 0205 GMT, compared with Wednesday’s closing rate of 1,094.9.
The dollar index soared to levels just below a six-year high against a basket of currencies after the Fed altered its long-running pledge regarding the timeline of its rate normalisation, saying it would take a “patient’’ approach in deciding when to hike rates.
“The Fed sounded especially hawkish in that it seemed to disregard the weakness in oil, global growth and financial turmoil in Russia to focus only on the domestic economic picture,’’ said Hong Seok-chan, an FX strategist at Daishin Economic Research Institute.
The local currency was also pressured to pull back as the Japanese yen stepped further back from a one-month peak seen on Tuesday, as sharp rebounds in the rouble and oil prices put a damper on safe-haven buying.
The yen/won cross rate was sitting just above a six-year low of 9.2935.
South Korean shares edged lower amidst a choppy trading session, weighed by heavy foreign sell-off despite a Wall Street rally triggered by the Federal Reserve's upbeat assessment of the US economy.
The Korea Composite Stock Price Index (KOSPI) was down 0.11 per cent at 1,898.10 points as of 0205 GMT.
Offshore investors dumped a net 479.8 billion won ($434.92 million) worth of shares on the main bourse, having cut a net $2.1 billion from their KOSPI portfolios in the last six trading sessions.
Cheil Industries Inc was up 3.3 percent after doubling its listing price on its market debut, raising 1.52 trillion won ($1.38 billion) in South Korea’s biggest IPO in four years.
Recently battered petrochemical counters soared as oil prices rebounded sharply after a relentless plunge, with Lotte Chemical rallying 3.1 per cent, while LG Chem gained 1.3 per cent.
Auto shares bucked the trend, however, with Hyundai Motor sliding 1.5 per cent, while sister firm Kia Motors fell 1.1 per cent as a weak rouble threatened to undercut the carmakers’ profit margins in the Russian market.
The KOSPI 200 core benchmark was up 0.09 per cent, while the junior, tech-heavy KOSDAQ fell 0.31 per cent.
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