South Korea’s won fell to the lowest level this month as the nation’s economic growth missed economists’ estimates and on concern that global expansion remains weak. Government bonds were steady.
Gross domestic product increased 1.5 percent from a year earlier, unchanged from the expansion in the third quarter, the central bank said today. That’s less than the 1.8 percent median forecast of 12 economists surveyed by Bloomberg News. The International Monetary Fund cut its global growth forecasts and projected a second year of contraction in the euro region, while Japan’s exports fell for a seventh month in December and its annual trade deficit swelled to a record.
“Concerns that economic recovery is still weak in Korea and globally are driving stocks and the won lower,” said Jeon Seung Ji, analyst at Samsung Futures Inc. in Seoul. “While investors are cautious after the finance minister warned of the won’s gains, exporters may look for opportunities to sell dollars and that may limit further declines.”
The won fell 0.3 percent to 1,069.28 per dollar as of 10:16 a.m. in Seoul, according to data compiled by Bloomberg. It touched 1.070.53 on Dec. 28. One-month implied volatility in the won, a gauge of expected moves in exchange rates used to price options, rose 12 basis points, or 0.12 percentage point, to 6.02 percent, the data show.
Finance Minister Bahk Jae Wan vowed to curb volatility, saying recent gains were too steep. The government is “all ready” for new measures, Bahk told reporters in Seoul yesterday, 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 in Asia’s best performance.
The yield on South Korea’s 2.75 percent bonds due September 2017 was unchanged at 2.83 percent, Korea Exchange prices show. The Kospi index of shares dropped 0.6 percent.
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