SEOUL (Dow Jones)--The South Korean won rose for a second straight session and remained higher against the U.S. dollar late Monday as signs of political stability emerged in the euro zone and data showing a much improved U.S. consumer sentiment over the weekend reignited investors' appetite for risk-sensitive currencies.
The dollar slipped to an intraday low of KRW1,117.0 in the morning session but recouped most of its earlier losses later in the day on import settlements and foreign equity fund outflows.
Strong gains in local stocks, which rose 2.1% on the back of progress in the euro-zone sovereign debt crisis, helped boost sentiment for the won. Foreign investors bought more than KRW130 billion worth of local shares on the Korean bourse, ending a three-day selling spree.
Woori Futures analyst Byeon Ji-young said a renewed risk appetite among participants, and relatively high yields in Korean assets, will likely push the USD/KRW pair lower to test a key support level of 1,110 this week, although any aggressive dollar-selling isn't likely given lingering fears of a possible euro-zone debt contagion. There is also caution that the Korean authorities may intervene in the market.
She tipped a KRW1,105-KRW1,130 range for the dollar this week.
Korean government bonds and bond futures were lower given the improved risk appetite.
Market participants were also taking some profit after Bank of Korea Gov. Kim Choong-soo Friday signalled that the BOK hasn't given up its intention to normalize or raise rates after its decision to keep rates steady at 3.25%, traders said.
Lead December bond futures ended 7 ticks lower at 104.34.
-By In-Soo Nam, Dow Jones Newswires; 822-3700-1902; In-Soo.Nam@dowjones.com
