The South Korean won turned lower again against the dollar on Tuesday in choppy trading with continued selling of Seoul shares by foreigners prompting investors to cover dollar-short positions. Market players stayed cautious of a global credit crisis due to fallout from the US subprime mortage sector, although demand from exporters for settlements help the won limit losses.
Investors were reluctant to build big positions in either direction as they wait for US financial markets to reopen after Monday's Labour Day holiday and US economic data this week. The won was last quoted at 939.0/9.3 per dollar, compared to its previous closing bid of 937.1. "Players had to cover dollar-short positions until the local markets were closed putting pressure on the won," said a foreign bank dealer.
Seoul shares ended down 0.38 percent after hitting three-week highs as foreign investors sold a net 61.7 billion won in shares on the main stock market. Foreigners had unloaded a net 54.6 billion won in shares in the prior session. The yen was at 115.83/86 per dollar versus around 115.80 in late London trading on Monday.
Market players are awaiting US economic data later in the day such as the August manufacturing index from the Institute for Supply Management, which likely grew at a slower pace after several regional reports came in lower.
On the local economic front, growth in South Korea's foreign exchange reserves declined in August on weakness in non-US currencies, central bank data showed.
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