SEOUL, October 20 (AJP) — South Korea's won closed at its strongest level in more than two years Tuesday as exporter dollar selling outweighed equity outflows, while government bond yields fell on foreign futures buying and a sharp stock selloff.
The won closed up 2.2 won at 1,328.1 per dollar, its strongest closing level since Oct. 2, 2024, when it finished at 1,319.3 won.
It was also the first close in the 1,320-won range since Sept. 26, 2024, when the currency ended at 1,327.2 won. The won opened at 1,330.3 and strengthened as far as 1,325.4 during morning trading.
The currency strengthened despite a sharp decline in local stocks and continued foreign selling.
The benchmark KOSPI fell 3.73 percent to 5,552.74, while foreign investors sold a net 530 billion won ($399 million) of shares.
Persistent dollar selling by exporters outweighed dollar demand linked to foreign stock sales and import settlements, keeping the won on an upward course even as risk sentiment deteriorated in the equity market.
Government bonds also strengthened after reversing losses earlier in the session.
The three-year government bond yield fell 3.7 basis points to 3.840 percent, while the benchmark 10-year yield dropped 2.9 basis points to 4.176 percent.
Korean bonds opened weaker after U.S. Treasury yields rose overnight, with two- and 10-year yields both climbing about 6.6 basis points as weakness in European government bonds spilled over into the U.S. market.
The market reversed course later in the session as foreign investors increased purchases of three- and 10-year government bond futures. The sharp decline in Korean equities also supported demand for bonds, while U.S. Treasury yields edged lower during Asian trading.
The moves came two days before the Bank of Korea's monetary policy meeting on Thursday.
The central bank raised its Base Rate by 25 basis points to 3.00 percent in August and has said it will determine the timing and pace of any further increases based on inflation, economic growth and financial stability conditions.
An AJP poll of seven economists published Monday found broad expectations for the BOK to keep the rate unchanged this week. Of six respondents who specified the timing of the next move, five expected another quarter-point increase in November, while four of six who gave a terminal-rate forecast saw the tightening cycle peaking at 3.50 percent.
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