SINGAPORE (Reuters) - The South Korean won hit a near six-year high on Wednesday thanks to capital inflows, leading gains among emerging Asian currencies, while the Indonesian rupiah rose in offshore markets as parliamentary elections started.
The won rose as much as 1.2 per cent to 1,040.1 per dollar, its strongest since August 2008.
Foreign investors extended a buying spree in Seoul's main stock market to an 11th consecutive session, purchasing a net 2.5 trillion won (S$3 billion) worth of stocks during the period, according to Korea Exchange data. Offshore funds dumped dollar holdings to stop losses.
South Korea's foreign exchange authorities were suspected of buying dollars to prevent the won from strengthening past 1,040, but the intervention was not seen as strong, traders said.
Investors had built up short positions in the won on caution that the authorities may keep the currency weaker than 1,050, but the finance ministry or the central bank had not been spotted intervening, traders said.
"It is less necessary to keep the won weaker as the government is seeking a balanced development in exports and domestic consumption," said Jeong My-young, research head at Samsung Futures in Seoul.
South Korean President Park Geun-hye promised to shift economic policy away from supporting big exporters towards lifting domestic-market-oriented industries and household income.
Korea Inc. is also now less vulnerable to foreign exchange rates than in the past as major exporters such as Samsung Electronics and Hyundai Motor are producing part of their goods outside the country.
Big exporters have focused more on expanding overseas production bases than local factories. Hyundai plans to build its fourth plant in China for about 1 trillion won, a source said last month.
In 2013, the won rose 1.4 per cent thanks to a sustained current account surplus and capital inflows, while most emerging Asian currencies fell on worries that the Federal Reserve's stimulus reduction may cause fund outflows from the region.
The rupiah rose in non-deliverable forwards (NDFs) markets as Indonesians began voting for a new parliament. The rupiah's one-month NDFs rose 0.5 per cent to 11,195 per dollar, the strongest since Nov. 1.
The opposition Indonesian Democratic Party-Struggle (PDI-P) is likely to dominate in the elections, opinion polls showed. That bolstered the chances of a victory by its popular candidate, Jakarta Governor Joko Widodo, widely known as Jokowi, in a presidential election.
Potential wins by the PDI-P and Jokowi are likely to attract more foreign funds, analysts have said.