Seoul, Oct 12: The South Korean currency surged against the dollar on Monday on expectations that the US central bank may delay its interest rate hike to early next year. The Fed’s first rate hike this year is “an expectation, not a commitment”, Xinhua quoted US Federal Reserve Vice Chairman Stanley Fischer as saying on the sidelines of the International Monetary Fund (IMF) meeting on Sunday.
His comments boosted expectations for the postponed rate hike if the US economy shows sluggishness later this year, sending the dollar to weaken to the South Korean won. The won/dollar exchange rate settled at 1,143.5 won per dollar, down 15.5 won from the previous session. It was the lowest close in about three months.
South Korean stocks ended higher for five straight sessions on hopes that the delay in the US rate increase may have a positive effect on the South Korean economy. The benchmark Korea Composite Stock Price Index (KOSPI) rose 2.1 points (0.1 percent) to 2,021.63 at the close. Trading volume stood at 624.4 million shares worth $5.24 billion.
Investors turned cautious about purchasing exporters as the strong South Korean currency could reduce their overseas earnings when repatriated and dampen price competitiveness. Samsung shares declined 0.8 percent, and top automaker Hyundai Motor shrank 1.5 percent. Memory chip giant SK Hynix retreated 1.9 percent and the biggest auto parts maker Hyundai Mobis slipped 2.1 percent. Leading cosmetics maker Amore Pacific tumbled 4.5 percent, and the most-used search engine Naver advanced 2.3 percent.