* Local authorities stem the won's strength early
* Won headed for third straight winning month
* KOSPI up for the month as foreign inflows continue
By Jungmin Jang
SEOUL, May 30 The South Korean won
steadied after hitting its strongest level in nearly six years
on Friday morning, as suspected dollar-buying intervention by
the local foreign exchange authorities quickly erased the gains.
The won hit 1,017.1 per dollar, the strongest since Aug. 7,
2008, soon after the start of local trade but took a sharp turn
downward to as low as 1,023.5 on the suspected intervention.
The local currency was quoted at 1,020.2 per
dollar as of 0225 GMT, compared with Thursday's onshore close at
"Supply and demand wise, exporters' won demand and
importers' dollar demand are quite heavy. An aggressive movement
by either side appears to be difficult after the authorities
lowered the trading level," a currency dealer in Seoul said.
Dealers and analysts, however, forecast the upside pressure
for the won will only become stronger in the coming month.
"As the European Central Bank is expected to loosen its
monetary policy in June, risk appetite for Asian currencies
including the won will pick up more on ample liquidity," said
Eugene Futures currency analyst Kim Dae-hyung.
Kim however said the 1,020 level for the USD/KRW pair would
be sustained after local authorities strong stance early in the
session, while tipping the won to strengthen as much as 1,010
per dollar in June.
The South Korean foreign exchange authorities have been
pacing the won's strength near 1,020 level since May 7,
attempting to tame the won's rapid one-sided rise.
The won's gains in May have slowed down to 1.3 percent
compared with April's 3 percent rise, but is headed for a third
consecutive winning month.
Seoul shares wavered early and held ground on Friday morning
as local institutional investors' selloff squared off with
persistent foreign capital inflows.
The Korea Composite Stock Price Index (KOSPI) was up
0.05 percent at 2,011.28 points as of 0225 GMT and slid 0.3
percent for the week. But on a monthly basis, the main bourse
has risen 2.6 percent so far.
Foreign investors positioned as net buyers near mid-session
by purchasing 52 billion won ($51 million) of shares while the
institutional investors sold a net 74 billion won.
"Foreign net inflows are the key to the market's upward
momentum, and should the ECB announces an unprecedented policy
easing alongside rate cuts, offshore investors will keep chasing
local stocks," said Chung Seung-jae, a market analyst at Mirae
Foreigners have been net buyers for 13 consecutive sessions
through Thursday, bringing in more than 2.7 trillion won during
Daewoo Engineering & Construction Co Ltd fell
2.2 percent after a regulatory filing to the Korea Exchange on
Friday said the company sold the 5 percent stake in CJ Korea
Express Corp which is worth 140 billion won.
CJ Korea Express shares dropped 2.1 percent.
0225 GMT Prev close
Dollar/won 1,020.2 1,020.6
Yen/won 10.0522/453 10.0246
*KTB futures 106.10 106.12
KOSPI 2,011.28 2,012.26
* Front-month futures on three-year treasury bonds
($1 = 1020.6000 Korean Won)
(Additional reporting by Yena Park; Editing by Eric Meijer)