The South Korean won fell against the dollar on Monday, tracking a weaker yen and as foreign investors kept selling local shares amid caution about growth in Asia's third-largest economy.
But losses in the won were limited, helped by dollar supplies from exporters ahead of the end of the month. The won settled at 959.6 per dollar, 0.23 percent lower than Friday's local close of 957.4. It hit a session low of 959.7 just before the market closed, according to dealers.
"Some banks reversed their dollar-short positions to long, possibly expecting dollar demand from foreign equity investors," said a foreign bank dealer. On Seoul's main stock market foreign investors sold a net 353.2 billion won worth of shares, after dumping 637.7 billion won in the previous seven sessions. The main index ended flat.
Lee Seong-tae, South Korea's central bank chief, said on Monday that growth in the country's economy would probably slow next year from roughly 5 percent forecast for 2006 and tensions linked to North Korea remained a key risk.
Lee also said during a parliamentary hearing the won might have reached or was close to its peak after rising for the past three to four years against the major currencies.
The governor also added that South Korea expects a net loss in 2007 mainly due to interest payments on bonds issued in the past to neutralise the effect from intervention in the foreign exchange market.
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