Korean Won Climbs to 14-Month High on Greece Support; Bonds Drop

South Korea’s won rose to a 14-month high on speculation European finance ministers will find a way to help Greece finance its budget deficit and stem the region’s three-year debt crisis.

The currency advanced for a second day as euro-area finance ministers meet today to discuss ways to plug a 15 billion-euro ($19 billion) gap in Greece’s finances and win the International Monetary Fund’s support to give the nation more time to meet its debt target. Overseas investors bought South Korean shares for the first time in nine days, according to stock exchange data.

“Risk appetite is supported by some optimism that there will be an agreement at today’s meeting about a second aid package for Greece,” said Kim Dong Young, a currency dealer at Industrial Bank of Korea in Seoul. “Rising equities on the back of foreign buying are also adding to the won’s strength.”

The won gained 0.4 percent to close at 1,082.23 per dollar, according to data compiled by Bloomberg. The currency earlier reached 1,080.95, the strongest level since September 2011. One- month implied volatility, a measure of exchange-rate swings used to price options, slid 18 basis points, or 0.18 percentage point, to 5.60 percent. The Kospi index of shares advanced 0.6 percent.

The nation’s short-term overseas debt fell the most in a year as regulators encouraged banks to shift to longer-term borrowing. External debt maturing in one year or less dropped $8.1 billion to $132.6 billion as of the end of September from the previous quarter, the central bank said in a statement today. Short-term debt accounted for 31.6 percent of the total, the lowest since 1999, compared with 33.8 percent in the previous quarter, according to the Bank of Korea.

The yield on the government’s 2.75 percent bonds due September 2017 rose one basis point to 2.87 percent, Korea Exchange Inc. prices show. The one-year interest-rate swap climbed one basis point to 2.78 percent.

To contact the reporters on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net; David Yong in Singapore at dyong@bloomberg.net

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net

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