SEOUL, July 10 (Xinhua) -- Foreign purchase of South Korean securities hit a 17-month high last month as foreigners bought local bonds on expectations for an interest rate hike in the near future, central bank data showed Wednesday.
Foreign investors bought a net 4.78 billion U.S. dollars of domestic securities, including stocks and bonds, marking the biggest in 17 months since January last year, according to the Bank of Korea (BOK).
The foreign funds continued to flow into the domestic securities market for the fifth consecutive month on growing expectation for the BOK's rate cut within this year to bolster the lackluster economy.
The country's real gross domestic product (GDP), adjusted for inflation, contracted 0.4 percent in the first quarter from the previous quarter due to the continued fall in export.
The outbound shipment kept sliding for the seventh straight month through June on the global trade friction and the downturn in the business cycle of the global semiconductor industry.
The BOK left its benchmark interest rate unchanged at 1.75 percent, after raising it by 25 basis points to the current level in November last year.
Foreign capital of 4.56 billion U.S. dollars flowed into the local bond market last month, while 220 million U.S. dollars of foreign funds came into the domestic stock market.
The daily volatility in the won/dollar exchange rate averaged 0.32 percent in June, up from 0.30 percent in the prior month.
Premium for credit default swap (CDS), which gauges the country's five-year sovereign credit risk, averaged 33 basis points in June, down from 35 basis points in the previous month. It was attributed to the eased concern about the global trade dispute.
The daily average transaction of foreign currencies in the inter-bank market increased to 26.54 billion U.S dollars in the April-June quarter from 26.26 billion U.S. dollars in the previous quarter.