Korean Won Climbs From Three-Month Low on Recovery, BOK Comments
South Korea’s won rose from a three- month low after U.S. and Chinese data added to signs of recovery in the world’s largest economies and comments from a Bank of Korea official eased intervention concern. Government bonds fell.
It is too early for any central bank response to the yen’s slide against the won, Bank of Korea board member Moon Woo Sik said in an interview last week in Seoul, published by Bloomberg today. U.S. employers added 157,000 workers last month following a revised 196,000 gain in December and a 247,000 surge in November, Labor Department figures showed Feb. 1. China’s services industry grew at the fastest pace since August, an official report showed yesterday.
“There’s been a lot of talk about the won level and one of the options is to cut interest rates and today’s comments indicate that urgency has lessened,” said Sean Yokota, head of Asia strategy at Skandinaviska Enskilda Banken AB in Singapore. The market is a “little bit more comfortable” with the won’s advance, he said.
The won gained 0.8 percent to 1,088.33 per dollar as of 12:34 p.m. in Seoul, according to data compiled by Bloomberg. It had depreciated 3.9 percent in the past three weeks and touched 1,098.25 on Feb. 1, the weakest level since Oct. 26. The won strengthened 1.3 percent to 11.74 per yen today, adding to gains in seven of the past eight weeks.
“There’s some rebound in the won after last week’s sharp decline,” said Cho Young Bok, a Seoul-based currency dealer at Daegu Bank. “Support for the currency also came from some dollar sales from shipbuilders and manufacturers of heavy machinery.”
One-month implied volatility in the won, a gauge of expected moves in the exchange rate used to price options, dropped 23 basis points, or 0.23 percentage point, to 8 percent.
The won gained 8.3 percent versus the dollar in 2012 and touched a 17-month high of 1,054.49 on Jan. 15, prompting South Korean officials including Finance Minister Bahk Jae-Wan to say they would strengthen measures to curb the currency’s appreciation. Bahk said Jan. 23 the rally was too steep and the government was “all ready” for measures to reduce its volatility.
South Korea’s economy expanded 1.5 percent in the fourth quarter from a year earlier, the central bank said Jan. 24. That was less than the 1.8 percent median forecast in a Bloomberg News survey.
The yield on South Korea’s 2.75 percent bonds due December 2015 rose two basis points to 2.78 percent, Korea Exchange prices show.
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