Korean Won Set for Sixth Weekly Gain as Global Funds Buy Stocks
South Korea’s won is poised for a sixth weekly advance, the longest winning streak since October 2010, on optimism policy makers in the world’s biggest economies will address a global slump. Government bonds rose.
The People’s Bank of China announced its second interest- rate cut in month late yesterday, supporting demand in South Korea’s biggest export market. The European Central Bank also lowered borrowing costs and the Bank of England expanded a bond purchase program. Overseas investors bought $182 million more Korean stocks than they sold in the last four days after government data showed Korean exports rose in June for the first time in four months.
The won climbed 0.6 percent this week to 1,138.40 per dollar at 9:01 a.m. in Seoul, according to data compiled by Bloomberg. It fell 0.3 percent today. The won’s one-month implied volatility, a measure of exchange-rate swings used to price options, declined 28 basis points this week to 7.40 percent.
“Foreign money keeps flowing into Korean stocks and this, coupled with demand from exporters, pushed the won higher this week,” said Lee Jung Hyun, a currency dealer at state-run Industrial Bank of Korea (024110) in Seoul. “The market’s reaction to China’s rate cut is muted with traders largely keeping a nervous eye on what’s going on in Europe.”
Samsung Electronics Co., South Korea’s biggest exporter, posted a record quarterly profit today that beat analyst estimates as surging sales of Galaxy smartphones helped it challenge Apple Inc.’s iPhone. Operating profit totaled 6.7 trillion won ($5.9 billion) in the second quarter, a 79 percent jump from a year ago, the company said.
The yield on the government’s 3.5 percent bonds due March 2017 fell six basis points, or 0.06 percentage point, this week to 3.36 percent, Korea Exchange Inc. prices show. It declined one basis point today. Three-year debt futures rose 0.17 to 104.85.
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