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Won climbs to 30-month high

April 4, 2011 - 18:56 By 황장진
Korea’s won climbed to a 30-month high and bonds declined after the U.S. jobless rate unexpectedly dropped to a two-year low in March, spurring optimism that a global recovery is gaining momentum.

Overseas investors increased their holdings of Korean shares for a 13th day, the longest streak of net purchases this year. The nation’s foreign-exchange reserves rose to $298.62 billion at the end of March from $297.67 billion a month earlier, figures by the Bank of Korea showed Monday.

“The U.S. jobs report is prompting investors to buy more stocks around the world and also spurring foreign investors to buy Korean stocks, supporting the won,” said Ko Yun-jin, currency dealer at Kookmin Bank in Seoul.

“At the same time, foreign stock investors will need to buy the dollars with the won they received as dividends and that is likely to limit gains in the won in coming days.”

The won rose 0.4 percent to 1,086.70 per dollar at the close at 3 p.m. in Seoul, gaining for a fifth day. The currency touched 1,083.85, the strongest level since September 2008.

Korean stocks finished 0.24 percent lower on steep falls in oil refiners amid investor caution following recent gains.

Snapping a seven-session winning streak, the benchmark Korea Composite Stock Price Index (KOSPI) fell 5.14 points to 2,115.87.

Trading volume was moderate at 298 million shares worth 7.96 trillion won ($7.32 billion) with gainers leading losers 428 to 382.

“The market finished lower but the KOSPI’s overall uptrend has not changed. Foreign investors maintained a buying position and financial companies remained bullish,” said Lee Jae-man, an analyst at Tongyang Securities Co.

“But there was some pressure from the sharp gains in the latest sessions, and oil refiners gave investors an excuse to take a break from buying.”

The KOSPI closed at an all-time high of 2,121.01 on Friday after rising for seven straight sessions.

Oil refiners were the biggest losers. SK Innovation plummeted 10.33 percent to 191,000 won after the top oil refiner said Sunday it will cut local prices of gasoline and diesel for three months to July 6 to help battle runaway inflation.

GS Holdings, parent of the industry runner-up GS Caltex, also sank 7.47 percent to 87,900 won, and smaller rival S-Oil tumbled 5.59 percent to 143,500 won on expectations that smaller players will follow suit in cutting prices.

But CJ Jeiljedang, the leading food company, surged 4.59 percent to 239,500 won on expectations that it will raise flour prices. Top flour maker Dongaone said Friday it plans to hike flour prices to reflect higher costs of raw materials.

The local currency closed at 1,086.6 won to the greenback, up 4.5 won from Friday’s close, on a report that the country’s foreign exchange reserves rose to a new high last month, dealers said.

(From news reports)