The South Korean won rose slightly against the dollar on Friday as foreign investors turned net buyers of local stocks amid easing worries about Ireland's debt crisis and on exporters' demand for settlements. The won, however, gave up most of its earlier gains as Vice Finance Minister Yim Jong-yong said the country planned to prepare further capital measures by the end of this year and investors covered dollar-short positions.
The local currency is expected to stay in a range around 1,130 per dollar on growing caution over the country's additional steps to reduce sharp swings in capital flows, analysts and dealers said. "Even though yesterday's announcement was nothing new, nobody knows what kind of cards the government has on the table. So, nobody dares to make big bets either way," said June Park, an economist at Woori Investment & Securities.
On Thursday, the finance ministry said it was supporting legislative efforts to remove a withholding tax exemption for foreign bond investors and would help related bills pass parliament as soon as possible. Yim said the government would unveil additional measures on capital flows if necessary, which might include a bank levy and limits on forex forward positions held by banks. The won ended domestic trade at 1,133.6 per dollar, compared with Thursday's domestic close of 1,134.9. It lost 0.5 percent versus the US dollar for the week.