South Korea’s local currency fell 0.55 percent to close at 1142.2 won against the US dollar Monday, amid growing security tension on the Korean Peninsula.

The benchmark Korea Composite Stock Price Index also shed 18.41 points, or 0.86 percent, to close at 2,133.32 with key blue chip losses. LG Electronics moved down 4.23 percent. Major chipmaker SK hynix shed 1.61 percent to close at 49,000 won.

North Korea launched an extended range Scud on Tuesday, which US officials said exploded in the air. It is also expected to conduct its sixth nuclear test later this month, according to news reports.

In response to North Korea’s provocation, the US recently moved a navy strike group to sail north to the Western Pacific, the South Korean military confirmed Monday.

Analysts said the rising tension on the Korean Peninsula is likely to prod investors to reduce risky bets and further weaken the local currency.

Meanwhile, the recent agreement between US President Donald Trump and Chinese President Xi Jinping -- to boost US exports and reduce US trade deficits with China -- has reduced the chances of South Korea being named a currency manipulator by the US, observers said.

Korea was one of six countries put on a monitoring list by the US Treasury last October, sparking concerns that a weak won might hurt exports, the key engine for the Korean economy. The US Treasury is expected to release its biannual currency report on Friday or Saturday, sources said.

(ws@heraldcorp.com)