Foreign purchase of S.Korean stocks, bonds hits 5-year high

Foreign purchase of South Korean stocks and bonds hit the highest in over five years on expectations for the U.S. Federal Reserve's gradual interest rate hike, central bank data showed on Wednesday.

Foreigners purchased 5.49 billion U.S. dollars in local stocks and bonds in March, the biggest since February 2012, according to the Bank of Korea (BOK). It was up 0.56 billion dollars from the previous month.

Among the total, foreign investment in local stocks reached 3.15 billion dollars in March, surging from 390 million dollars in February.

Foreign investment into domestic bonds fell from 4.54 billion dollars in February to 2.34 billion dollars in March.

The Fed raised its benchmark interest rate by a quarter percentage point in March, but expectations emerged for the Fed's gradual rate hike for the rest of this year.

The BOK has kept its policy rate on hold at an all-time low of 1.25 percent since June last year.

Volatility in the won/dollar exchange rate stood at 0.47 percent in March, up from 0.39 percent in February. The won/dollar exchange rate was 1,118.4 won per dollar as of end-March, down 1.1 percent from a month earlier.

Premium on the 5-year credit default swap, which reflects the country's credit risks, averaged 48 basis points in March, up 2 basis points from the prior month. Enditem