The South Korean won turned higher to hit a week high against the dollar on Friday as demand from foreign equity investors and exporters prompted market players to clear dollar-long positions.
But the won failed to extend its gains amid persisting caution over dollar-buying intervention by the country's foreign exchange authorities and on weakened expectations of lower US interest rates after solid housing data in the world's top economy.
South Korean authorities were not spotted carrying out actual dollar purchases to check the local unit's strength, dealers said. The won was last quoted at 928.1/8.4 per dollar, after hitting a bid of 927.8, its strongest since 923.5 on May 17 when South Korea was suspected of buying around $1 billion. The South Korean currency briefly fell to 934, compared to its previous closing bid of 931.1. Seoul financial markets were closed on Thursday to mark Buddha's birthday.
It rose 0.6 percent versus the dollar for the week. "Many bids for the won from exporters and foreign equity investors forced market players to square dollar-long positions," said a foreign bank dealer. Foreign equity investors sold a net 139 billion won in shares on Seoul's main stock market as the benchmark KOSPI closed down 0.12 percent.
But foreigners bought a combined 548.1 billion won worth of shares in the previous two sessions. On the corporate front, South Korea's Hanjin Heavy Industries Co has won shipbuilding orders worth a total of $2.2 billion in May from foreign companies, prompting currency investors to expect more demand for the won.
Data released during the holiday showed South Koreans boosted overseas stock and bond investment by 75 percent last year in the wake of government efforts to pump money out of the country and a global equities boom.
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