* Won crawls higher following Tuesday's intervention
* KOSPI down, but supported by foreign inflows
SEOUL, May 21 The won was slightly weaker
on Wednesday morning, on dollar demand following suspected
intervention by South Korean foreign exchange authorities the
The local currency was quoted at 1,025.9 against
the dollar as of 0235 GMT, compared with Tuesday's onshore close
"It's unclear whether the authorities are interveneing
today, but dollar bids are strong. There is talk of dollar
buying from state-run companies and pension funds while
exporters' won-demand is at average levels," said a currency
South Korean foreign exchange authorities were spotted
intervening in markets on Tuesday to stem the won's strength.
The local currency has appreciated 3.8 percent against the
dollar this quarter.
Upside pressure remains heavy, however, as dealers and
analysts point out that the market is approaching the month-end
settlement period for exporters amid weakening dollar momentum.
"The previous intervention bought time for the market to
digest dollar-selling by exporters. This time appears to be no
different with no variables to trigger dollar-long positions,"
wrote Woori Futures' analyst Son Eun-jeong in a note to her
Local stocks erased earlier losses to hold ground, with the
Korea Composite Stock Price Index (KOSPI) up 0.2 percent
at 2,014.83 points as of 0240 GMT.
"In the absence of market moving variables, the index is
left in the hands of foreign net inflows, which have been
running in on bets that the European Central Bank will announce
policy easing in June," said Kwak Hyun-soo, an analyst at
Shinhan Investment Corp.
Foreign investors purchased a net 65 billion won ($63.4
million) worth of KOPSI shares to underpin the market.
Foreigners positioned as net buyers for a sixth session by
Tuesday, bringing total inflows to 1.8 trillion won during the
Investors are eyeing the U.S. Federal Reserve's latest
minutes due later in the global day for further clues on the
timing of a future interest rate hike.
Naver Corp, the country's biggest search portal
operator, rose 2.8 percent while steelmaker POSCO
gained 1.1 percent.
0240 GMT Prev close
Dollar/won 1,025.9 1,025.3
Yen/won 10.1343/274 10.1145
*KTB futures 106.00 105.99
KOSPI 2,014.83 2,011.26
* Front-month futures on three-year treasury bonds
($1 = 1025.3500 Korean Won)
(Reporting by Jungmin Jang; Additional reporting by KyoungHo
Lee; Editing by Jacqueline Wong)