The won closed at 1,345.6 per dollar at 3:30 p.m., weakening 5.1 won from 1,340.5 in the previous session.
The currency opened at 1,344.4 and strengthened as far as 1,336.3 in morning trading before reversing course and reaching 1,349.0 during the session.
The won weakened despite a softer global dollar and stronger yen, as rising oil prices raised concerns over South Korea's import bill and importers stepped up dollar demand around 1,340 won per dollar.
West Texas Intermediate crude rose above US$94 a barrel during Asian trading amid renewed concerns over Middle East supply disruptions.
The National Pension Service's halt to currency hedging also limited further won appreciation, while dollar selling by exporters and gains in the yen capped the rise in the dollar-won rate.
Government bonds finished broadly steady after an early rally faded, with most benchmark yields moving by less than 1 basis point.
The three-year government bond yield edged up 0.1 basis point to 3.901 percent, while the 10-year yield showed the clearest move, rising 1.6 basis points to 4.401 percent.
The five-year yield gained 0.7 basis point to 4.127 percent, while the 20-year yield fell 0.7 basis point to 4.560 percent. The 30-year and 50-year yields rose 0.4 and 0.3 basis point to 4.635 percent and 4.543 percent, respectively.
The spread between the three-year and 10-year yields widened to 50.0 basis points from 48.5 basis points a day earlier, reflecting a modest steepening of the curve rather than a broad selloff.
Bonds had rallied in morning trading, with the three-year yield falling as low as 3.876 percent and the 10-year yield to 4.362 percent.
Foreign investors bought three- and 10-year bond futures, while investors sought value around the 3.9 percent level in the three-year sector.
The gains faded later in the session as higher oil prices kept inflation risks in focus and overseas bond yields moved higher during Asian trading, leaving the domestic market close to flat by the end of the day.
U.S. markets had been closed Monday for the Labor Day holiday, leaving Seoul investors with limited overnight direction.
Attention is now shifting to U.S. inflation data after stronger-than-expected employment figures revived expectations of further Federal Reserve tightening.
Markets are also watching the Bank of Japan's policy meeting next week, with expectations of another rate increase contributing to the yen's recent strength.
AJP Takeaways
- South Korea's won weakened 5.1 won to 1,345.6 per dollar Tuesday as higher oil prices and importer dollar demand outweighed support from a softer dollar and stronger yen.
- Government bonds surrendered an early rally, with the three-year yield ending nearly flat at 3.901 percent and the 10-year yield rising 1.6 basis points to 4.401 percent.
- U.S. markets are turning to U.S. inflation data and upcoming Federal Reserve and Bank of Japan policy meetings for direction after stronger U.S. employment data revived tightening expectations.
Copyright ⓒ Aju Press All rights reserved.
