South Korea’s won, Asia’s best- performing currency of 2012, fell toward this month’s low after Finance Minister Bahk Jae Wan vowed to curb volatility, saying recent gains were too steep. Sovereign bonds declined.
The government is “all ready” for new measures, Bahk told reporters in Seoul today, declining to comment on when they will be announced. The currency touched 1,054.49 on Jan. 15, a level not seen since August 2011, after rallying 8.3 percent last year. Overseas funds sold more South Korean shares than they bought on all but one of the last eight days, cutting their holdings by $844 million in that time, exchange data show. They were net sellers again today.
“Rising speculation that South Korea may take steps on the won’s gain, and the recent net sales in equities by foreigners are weakening the currency,” said Hong Seok Chan, analyst at Daishin Economic Research Institute in Seoul. “Some exporters may want to take profit to convert their proceeds, which may limit further declines in the won.”
The won fell 0.4 percent to close at 1,066.18 per dollar in Seoul, according to data compiled by Bloomberg. It touched this month’s low of 1,067.77 yesterday. One-month implied volatility in the won, a gauge of expected moves in exchange rates used to price options, dropped 23 basis points, or 0.23 percentage point, to 5.80 percent, the data show.
Goldman Sachs Group Inc. cut South Korea’s economic growth forecast for this year to 3.1 percent from 3.4 percent today. A government report showed sales at major South Korean department stores declined in December on weak demand.
The yield on South Korea’s 2.75 percent bonds due September 2017 fell one basis point to 2.83 percent, Korea Exchange prices show.
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