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South Korea's Won Advances This Week on Improving Global Economic Outlook
South Korea’s won was headed for a second weekly gain as better-than-estimated data from the world’s three biggest economies brightened the outlook for exports.
The U.S. Labor Department yesterday reported that jobless claims dropped to a two-month low and official data showed Japan’s gross domestic product grew an annualized 1.5 percent in the second quarter, faster than the 0.4 percent announced last month. China, South Korea’s largest overseas market, reported that imports in August grew at the fastest pace in three months.
“Demand for safer assets is subsiding and that will continue to help strengthen the won,” said Seo Jeong Hun, chief economist at Korea Exchange Bank in Seoul. “But risks haven’t subsided. We have to remember that Korea is highly dependent on the global economy and that we’re not immune to external shocks.”
The won rose 0.6 percent this week and was little changed from yesterday to trade at 1,167.71 as of 11:51 a.m. in Seoul, according to data compiled by Bloomberg. The currency appreciated 6.8 percent in the past three months, the best performance among Asia’s 10 most-active currencies excluding the yen, as overseas investors pumped more than $3 billion into Korean stocks.
Intervention Speculation
The won pared gains today following a $100 million purchase of the U.S. currency at 1,165, prompting speculation that the central bank intervened, said three traders who asked not to be identified because authorities don’t make their actions public.
South Korea has seen “herd behavior” in its currency in the past two days, Kim Yi Tae, director of foreign exchange at the finance ministry, said yesterday. The government will take measures to stabilize the market when “exceptional” movements occur and won’t seek a stronger won to contain inflation, he said.
U.S. initial jobless claims dropped to 451,000 last week, Labor Department figures showed. That was lower than the 470,000 estimated by economists in a Bloomberg survey. China’s imports rose 35.2 percent last month, compared with the median forecast for a gain of 27.5 percent in a separate poll.
The yield on South Korea’s 3.75 percent bond due in June 2013 was unchanged at 3.40 percent, a 19-month low, according to Korea Stock Exchange.
Overseas investors poured $17.2 billion into government bonds in the three months ended August, according to data released by the Seoul-based Financial Supervisory Service.
To contact the reporter on this story: Frances Yoon in Seoul at fyoon2@bloomberg.net.
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