South Korean won falls to 14 month low after Fed minutes, shares down

SEOUL (Reuters) - The South Korean won fell to a 14-month low on Thursday and was poised for a third day in a row of losses as minutes from the Federal Reserve hinted that the U.S. central bank was still on track to hike interest rates next year.

"Despite the dangers posed by low inflation, the Fed still appears determined to raise rates," said Ma Ju-ok, an economist at Kiwoom Securities.

The minutes also showed Fed members were relatively unconcerned about the dollar's strength.

The won was quoted at 1,111.7 to the dollar as of 0210 GMT, compared with Wednesday's close of 1,106.3, breaking clear of a major support line.

The currency also felt the squeeze of a weakening Japanese yen, which has tumbled more than 8 per cent against the dollar since Oct. 31 when the Bank of Japan unexpectedly announced additional stimulus measures.

Japan's surprise dip into a recession in the third quarter and Prime Minister Shinzo Abe's call for a snap election have accelerated the yen's slide.

The yen/won cross rate was hovering just above 9.4, a six-year low and a level perceived to be difficult for Korean exporters.

South Korean shares fell on Thursday as investors were unnerved by the soft yen and weakness in a key manufacturing survey in China, South Korea's largest trading partner.

The Korea Composite Stock Price Index (KOSPI) was down 0.64 per cent at 1,954.38 points as of 0210 GMT.

China's flash HSBC/Markit PMI released at 0145 GMT fell to a six-month low, adding to signs that the world's second-largest economy may be losing traction, although South Korean financial markets showed little immediate reaction following the news.

Automakers, which compete fiercely with their Japanese rivals in the export market, led the day's key decliners on persistent fears that a weak yen could undercut their price competitiveness.

Hyundai Motor slumped 3.5 per cent while sister firm Kia Motors fell 2.7 per cent.