The South Korean won slipped to a six-week low early on Tuesday, as the dollar bounced in the wake of hawkish comments from a Federal Reserve official. The won was quoted at 1,137.1 against the dollar as of 0230 GMT, down 0.39 percent versus Monday’s close of 1,132.7. The currency briefly touched 1,138.5, the weakest since April 21. “Comments from a New York Fed official reinforced views that the Fed will raise interest rates as planned. Uncertainties are also high ahead of South Korea-US summit, as many expect the meeting to set a direction in North Korea policies,” Kim Doo-un, a currency analyst at Hana Financial Investment said in Seoul.
The dollar and Treasury yields moved higher after New York Federal Reserve President William Dudley said inflation was a bit low but should rebound alongside wages as the labour market continues to improve, reinforcing expectations the U.S. central bank will continue on its path of tightening monetary policy. Adding to the won’s weakness this week is the market’s cautious mood before South Korea President Moon Jae-in’s visit to Washington later this month, Kim said, when the two leaders are expected to discuss policy responses to North Korea’s recent missile launches.
South Korean shares were flat with the Korea Composite Stock Price Index (KOSPI) off 0.05 percent at 2,369.60 points. Market heavyweight Samsung Electronics was up 2.15 percent at 2,378,000 won. It earlier hit a record high of 2,385,000 won on expectations the world’s top chip maker will post an all-time high operating profit in the second quarter. Smaller rival SK Hynix was up 3.66 percent at 65,100 won. Decliners outnumbered advancers 617 to 197. June futures on three-year treasury bonds shed 0.01 points to 109.57.