S.Korea won hits near six-year high after May current account data

Thu Jun 26, 2014 11:32pm EDT

* Won at strongest level vs dollar since early-August 2008
    * Dealers suspect limited intervention to curb appreciation
    * KOSPI tracks Wall Street lower

    SEOUL, June 27 (Reuters) - The South Korean won 
climbed to a near six-year high against the dollar on Friday
morning, supported by the country's sizeable current account
surplus in May and on exporters' demand for the currency to
settle bills due at the end of the month.
    But with the won having appreciated 4.1 percent so far this
year, the strongest performance by an Asian emerging currency,
dealers suspect local foreign exchange authorities have bought
dollars to curb the pace of the won's appreciation in limited
intervention they refer to as "smoothing".
    "Exporters are persistently demanding the won for
settlements and offshore funds are offloading their dollar
holdings," said a currency dealer at a domestic bank.
    The won was quoted at 1,014.2 versus the dollar
as of 0330 GMT, 0.2 percent stronger than Thursday's onshore
close at 1,016.2. It strengthened to 1,014.0 early in the
session, the strongest intraday level since Aug. 7, 2008.
    South Korea posted another sizeable current account surplus
in May, with central bank data on Friday showing the seasonally
adjusted figure at $7.69 billion, extending a surplus streak
dating back to June 2011. 
    In the local stock market, the Korea Composite Stock Price
Index (KOSPI) slipped 0.2 percent to 1,990.38 points as
of 0330 GMT. Analysts said the market was tracking Wall Street's
lower close overnight on rekindled concern over an
earlier-than-expected interest rate hike by U.S. Federal
Reserve. 
    "Investors are showing some concerns about changes
surrounding liquidity conditions, which is the main driver of
the market," said Kang Hyun-gee, an analyst at IM Investment &
Securities.
    Offshore and retail investors were net sellers, offloading a
combined 86 billion won ($84.5 million) of KOSPI shares near
mid-session, sending SK Hynix Inc and SK Telecom Co
Ltd 1.9 percent and 1.7 percent lower, respectively.
    Domestic institutional investors purchased a net 84 billion
won of shares to underpin the main bourse, and appeared to be
set to extend a buying spree to a seventh consecutive session.
                       0245 GMT    Prev close
 Dollar/won            1,014.2       1,016.2
 Yen/won            9.9951/882        9.9892
 *KTB futures           106.43        106.33
 KOSPI                1,991.23      1,995.05
 * Front-month futures on three-year treasury bonds
($1 = 1017.8000 South Korean Won)

 (Reporting by Jungmin Jang; Additional reporting by Yena Park;
Editing by Kenneth Maxwell)