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S.Korea won touches fresh 20-mth low, bonds rise on surprise BOK cut
March 12, 2015 / 2:51 AM / 2 years ago

S.Korea won touches fresh 20-mth low, bonds rise on surprise BOK cut

* Won on track for fourth straight day of decline
    * Bank of Korea delivered surprise 25 bp rate cut
    * KOSPI up on hopes that BOK cut will boost growth

    By Se Young Lee
    SEOUL, March 12 (Reuters) - The South Korean won 
touched a fresh 20-month intraday low while lead bond futures
rose on Thursday after the central bank unexpectedly cut its
base rate by 25 basis points to revive growth. 
    The won was down 0.6 percent at 1,133.6 against
the dollar as of 0225 GMT, on track for its fourth consecutive
session of declines. It traded as low as 1,136.4, the weakest
level since July 10, 2013.     
    The lead March bond futures were up 0.20 points at
109.08. 
    The Bank of Korea earlier on Thursday eased the policy rate
 to a record low 1.75 percent, the latest central
bank in the region to cut interest rates. Only four out of 33
analysts polled by Reuters ahead of the decision anticipated
such a move.  
    But the won recovered from the intraday low as some
investors who had bet on a surprise rate cut cashed out. Some
analysts note that the Bank of Korea may be reluctant to ease
further in order to keep already high household debt levels from
rising further. 
    "It's possible that the won may slip further as the day
progresses given the possibility of a U.S. interest rate hike,
but today's rate cut has been priced in," said Kim Yu-mi, an
economist at Hanwha Securities, adding that additional downside
for the local currency may be limited.  
    Dealers said they will closely monitor a news conference led
by Bank of Korea Governor Lee Ju-yeol for clues on future policy
direction.
    The Korea Composite Stock Price Index (KOSPI) was up
0.3 percent at 1,987.05 points, buoyed in part by the hopes that
the rate cut will help bolster the economy. 
    "The rate cut will help improve export conditions and it
could also lift domestic consumption," said Daewoo Securities
analyst Han Yo-sup.   
    Individual investors were net buyers of 64.6 billion Korean
won worth of KOSPI shares near mid-session, buttressing the
index. 
    Advancers outnumbered decliners 504 to 286.  
    The KOSPI 200 benchmark of core stocks was up 0.3
percent, while the junior KOSDAQ was up 1 percent.  
    
    
                      0225 GMT     Prev close
 Dollar/won            1,133.6        1,126.5
 Yen/won            9.3216/288         9.3124
 *KTB futures           109.11         108.91
 KOSPI                1,987.05       1,980.83
 * Front-month futures on three-year treasury bonds

 (Additional reporting by Yeawon Choi and Seunggyu Lim; Editing
by Eric Meijer)

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