Won Rallies to 4-Month High

The Korean won rose to the highest level in four months at W1,271.40 against the dollar on Tuesday as expectations of a rate freeze by the U.S. Federal Reserve increased investor appetite for stocks and other riskier assets.

Since rising to less than W1,300 against the greenback last week, the won rose further as foreigners sold dollars to buy Korean stocks while domestic exporters cashed in dollars they earned overseas.

The KOSPI closed up 0.33 percent on Tuesday at 2,637.95 points, edging toward this year's high of 2,641.16 points set on June 9.

The prevailing view is that the Fed will freeze U.S. interest rates this week. According to the Chicago Board of Trade there is a 75.8 percent chance of the Fed freezing the benchmark rate again. The Fed had been raising the rate by a quarter percentage point for 10 times in a row since March of last year to reach a historic 5.25 percent.