The South Korean won fell 1.8 percent against the dollar on Tuesday, hit by weak Seoul shares and as the U.S. currency rose after Washington’s bailout of troubled mortgage firms.

Investors saw the recent won’s <KRW=> jump as excessive although worries about a possible financial crisis, because of a massive amount of local bonds due to mature this week, eased.

The local currency cut some early losses on lingering caution over possible dollar-selling intervention by foreign exchange authorities and on exporters’ demand for settlement.

The won is expected to remain under pressure amid persistent worries about a global economic slowdown and as the dollar stays firm against other major currencies, although authorities are likely to keep checking the won’s fall, analysts said.

“The won has no choice but to fall further if the dollar keep extending gains globally,” said Jeon Seung-ji, an analyst at Samsung Futures Inc.

The worries about a local financial crunch eased, but economic factors such as household debt are not favourable to the local currency, she added.

Foreigners have boosted their South Korean bond holdings by more than $1 billion this month, soothing fears of a capital flight that had haunted the won currency for the past two weeks.

Around $6 billion worth of foreign-owned bonds mature this week, fanning speculation that the languishing won and worsening growth outlook for Asia’s fourth-largest economy will encourage investors to take the money and head for the exit.

The won was quoted at 1,101.25/1.75 per dollar as of 0600 GMT, compared with Monday’s domestic close of 1,081.4 <KRW=KFTC>. It fell to as low as 1,110.

Some dealers said the authorities were seen selling dollars, although many said it was unclear if the country intervened.

“Today, dollar bids from offshore players were so strong that the authorities’ efforts could not lift the won,” said a foreign bank dealer. Offshore currency investors’ trading usually heavily influences domestic investors.

Seoul shares <.KS11> ended down 1.5 percent as foreign investors sold a net 216.3 billion won worth of stocks on the main exchange.

On the corporate front, South Korean shipbuilder STX Shipbuilding <067250.KS> said it had won a 1.4 trillion won order to build eight very large crude carriers (VLCCs) from a Danish company, providing some relief to the currency. [ID:nSEL000246]

0600 GMT 0300 GMT prev close

Won <KRW=> 1,101.25/1.75 1,097.4/7.6 1,081.4

Yen/won <JPYKRW=R> 10.2363/22 10.2094/63 9.9475/49

KOSPI <.KS11> 1,454.50 1,450.49 1,476.65

Source: http://www.afxnews.com

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