Korean Won Gains Most Since June, Bonds Fall on Current-Account Surplus
South Korea’s won rose the most since June and government bonds fell as the current-account surplus hit a nine-month high and Federal Reserve Chairman Ben S. Bernanke expressed confidence in the U.S. economy.
The Bank of Korea said today the current-account surplus rose to $4.94 billion in July, from a revised $2.03 billion in June. Bernanke said the “growth fundamentals” of the U.S. economy haven’t been altered by the shocks of the past four years, adding that the Fed has tools to spur expansion, in a speech to central bankers in Jackson Hole, Wyoming, on Aug. 26.
“The won gained as Bernanke’s speech shifted market sentiment to more risk-taking,” said David Choi, head of trading at Hana Bank in Seoul. “Exporters’ selling dollars to convert income near the end of the month also supported the currency.”
The won strengthened 0.8 percent to close at 1,073.78 per dollar in Seoul, according to data compiled by Bloomberg. That’s the biggest gain since June 30. The currency reached 1,072.93 today, the strongest level in more than a week.
Finance Minister Bahk Jae Wan said today that inflation may remain high in August before moderating to a 3 percent range next month. Bahk said “downside risks” to the economy are building, indicating the government may have to cut this year’s growth forecast.
Bernanke stopped short of giving details as to when and how the Fed will consider stimulus to bolster the economy, contrary to last year when the Fed signaled further asset purchases at the same meeting.
South Korea’s three-year government bonds declined for a second day. The yield on the 3.5 percent debt due June 2014 rose three basis points, or 0.03 percentage point, to 3.51 percent, according to Korea Exchange Inc. prices.
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