The won rose more than 2 percent against the dollar on Wednesday, more than recovering its losses in the previous session, as several dealers suspected dollar-selling intervention by the South Korean authorities. Dealers also said the won was also lifted as Kookmin Bank, the country's top retail lender, appeared to have converted some of the $263 million proceeds from its sale of a stake in a local insurance company into the local currency.
The Seoul stock market fell more than 1 percent and foreign investors posted their biggest daily net sales of local shares in two weeks, but the local currency managed to sustain gains on sporadic dollar sales by the local authorities, dealers said.
"Today's dollar sales by the authorities were not that big in value, but traders went slightly long on the won because the sales gave a clear signal that the government was determined to prop up the won," said a domestic bank dealer. Kookmin Bank, the country's top retail lender, said last week it would sell its 14.9 percent stake in a local unit of ING Group back to the Dutch group for $263.1 million.
The won ended the local session at 1,306.3/7.3 per dollar, compared with compared with Tuesday's domestic close of 1,338.0. The local currency market will be closed on Thursday for the Christmas holiday. In the local stock market, foreign investors sold a net 104.5 billion won worth of shares, marking the biggest daily net sales since December 11, figures from the Korea Exchange showed.