Korean won surges against US dollar on foreign buying in local stocks
Exchange rates are displayed at a currency exchange booth in Myeong-dong, Seoul, Friday. Yonhap
The Korean won sharply strengthened against the U.S. dollar Friday, buoyed by net purchases by foreign investors in local stocks after hitting a nine-month high on suspected market-smoothing operations.
The won was quoted at 1,424 won per dollar at 3:30 p.m., up 13.4 won from the day before.
The won was traded at 1,418 won per dollar as of around 6 a.m., marking the strongest level since Oct. 20 last year.
Overnight, the won had advanced to as high as 1,419 won per dollar, with traders speculating that authorities conducted market-smoothing operations.
Foreigners bought a net 7 trillion won ($4.9 billion) worth of local stocks during the latest trading session, with the benchmark Korea Composite Stock Price Index skyrocketing 17.91 percent to close at 6,595.45.
The won's appreciation was in line with a gain in the Japanese currency.
At one point in overnight New York trading, the yen rose to about 158 per dollar, hitting the strongest level in more than two years.
Moon Ji-sung, deputy finance minister for international affairs, told Yonhap News Agency that Korea and Japan have maintained close coordination, but declined to confirm whether the two nations jointly conducted an intervention in the open market.
Lee Min-hyuk, an analyst at KB Kookmin Bank, said the correlation between the won and yen raised speculation that both Korean and Japanese foreign exchange authorities might have intervened in the markets.
The overnight strength of the won and the yen "could suggest the authorities in Korea and Japan may have intervened together," Lee said.