Adebowale, Adebolajo Found Guilty of U.K. Soldier Murder
Won Advances Most in Week on Current Account; Bonds Rise
The won rose the most in more than a week after South Korea’s current-account surplus widened and consumer confidence held at the highest level since May. Three- year government bond yields fell to a record low.
The surplus in the current account, the broadest measure of trade, widened in January to $2.25 billion from $2.14 billion the previous month, the central bank said in a report today. The won rebounded after falling yesterday as Italy’s election results stoked concern that Europe’s debt crisis will worsen.
“A surplus in the current account increases expectations of more dollar supplies, supporting the won,” said Hong Seok Chan, analyst at Daishin Economic Research Institute in Seoul. “Improved economic data in the U.S. are encouraging foreign investors buy more stocks in markets including Korea, while lingering concerns about Italy’s political uncertainty limit further gains in the won.”
The won climbed 0.3 percent to 1,084.48 against the dollar in Seoul, the biggest gain since Feb. 15, according to data compiled by Bloomberg. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, dropped 15 basis points, or 0.15 percentage point, to 7.29 percent.
South Korea is likely to post a current-account surplus this month, though it may narrow, Bank of Korea director Cho Yong Seung told reporters in Seoul today.
A separate central bank report today showed an index of consumer sentiment in South Korea was unchanged in February from the previous month as recent gains in the won drove down prices of imported goods. The currency strengthened 8.3 percent in 2012, the best performance among the 11 most-traded Asian currencies tracked by Bloomberg.
U.S. stocks rose yesterday, rebounding from the worst drop since November, after purchases of new homes surged in January by the most in two decades and consumer confidence jumped in February. Stocks also rose after Federal Reserve Chairman Ben S. Bernanke defended the central bank’s unprecedented asset purchases, saying they are supporting the expansion with little risk of inflation or bubbles in equities and bonds.
The yield on South Korea’s 2.75 percent government bonds due 2015 dropped two basis points to 2.62 percent, Korea Exchange Inc. prices show. That is the lowest yield for a benchmark three-year note since Bloomberg began compiling the data in 2000.
To contact the reporter on this story: Seyoon Kim in Seoul at email@example.com