(LEAD) Korean won breaches 1,200-mark to dollar

(ATTN: RECASTS headline, lead; UPDATES with market close and more details from para 2)
SEOUL, Sept. 23 (Yonhap) -- The South Korean currency rose to the 1,100-won level
against the U.S. dollar for the first time in about a year on Wednesday as
foreign investors bought Seoul shares amid recovery hopes, dealers said.

The local currency closed at 1,194.4 won to the greenback, up 9.4 won or 0.79
percent from the previous session. It was the first time that the Korean unit has
broken through the 1,200-won level to the dollar since Oct. 1, 2008.
"Amid the global weakness of the dollar, the local currency gained to the
1,100-won range although foreign stock buying was not that solid," said Byeon
Ji-young, a currency analyst at Woori Futures Co.
The local currency climbed as high as 1,193.9 at one point as offshore investors
dumped the greenback. The won, which tumbled 25.7 percent per the dollar last
year alone in the wake of the collapse of Lehman Brothers, has sharply gained
momentum since March thanks to increased overseas borrowing by local banks and
the country's growing trade surplus.
The won's ascent came as offshore investors continued to buy Seoul stocks,
lending some support to the Korean currency. Foreign investors bought a net 116.7
billion won (US$97.8 million) worth of Seoul shares on the main bourse.
On the back of their continued stock buying, the benchmark Korea Composite Stock
Price Index (KOSPI) surpassed the 1,700-point mark on Tuesday, the highest
closing in 15 months. But the KOSPI on Wednesday closed down 0.43 percent to
1,711.47, affected by profit-taking.
Analysts said the Korean currency is likely to experience upward pressure versus
the dollar due to a revived appetite for risk among foreign investors, but its
ascent could be limited due to intervention cautions.
"In the short term, the global weakness of the dollar will likely continue as
talk of an early exit from emergency steps is unlikely to emerge at the U.S.
Federal Reserve's rate-setting meeting or the G-20 summit," said Jeon Seung-ji, a
currency analyst at Samsung Futures Inc. She forecast that the local currency may
trade in the 1,180-level to the dollar in the short term.
Shin Min-yong, an economist at LG Economic Research Institute, said that given
the surplus of the current and capital accounts, the won cannot help receiving
upward pressure, adding that it may ascend to the 1,150-60 range to the dollar
toward the end of this year.
sooyeon@yna.co.kr
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