Korean Won Strengthens, Bonds Decline After Pickup in U.S. Manufacturing
The U.S. Institute for Supply Management’s factory index in the climbed to a six-month high of 53.9 in December, figures showed yesterday. Fifty is the dividing line between growth and contraction, and economists surveyed by Bloomberg News forecast a reading of 53.5. Output in China and India also gathered pace in December, according to data this month.
“Manufacturing data from major economies are easing global economy slowdown concerns, supporting the won,” said Hong Seok Chan, a Seoul-based currency analyst at Daeshin Securities Co. “Currency gains may be limited due to lingering European debt problems.”
The won rose 0.4 percent to 1,146.65 per dollar as of 9:41 a.m. in Seoul, after a similar-sized advance yesterday, according to data compiled by Bloomberg. The currency touched 1,144.49 earlier, the strongest level since Dec. 12. The Kospi Index (KOSPI) of shares climbed 0.3 percent, headed for its best close in three weeks.
South Korea and China will announce the beginning of free- trade agreement talks “soon” when President Lee Myung Bak and Chinese counterpart Hu Jintao meet in Beijing, the Dong-a Ilbo newspaper reported today, citing unidentified Korean government officials.
South Korea will strengthen monitoring of the economy and financial markets to deal with possible risks including the European debt crisis and a rise in raw-material prices, the finance ministry said yesterday. Policy makers will also seek measures to ease volatility of capital flows to ensure stability in the foreign-exchange market, the ministry said.
The yield on South Korea’s 3.5 percent bonds due September 2016 climbed two basis points, or 0.02 percentage point, to 3.50 percent, according to Korea Exchange Inc. prices.
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