Won Poised for Third Weekly Advance on GDP, Corporate Earnings

South Korea’s won headed for its third weekly gain as the nation reported better-than-expected economic growth and corporate earnings at home and in the U.S. topped estimates. Government bonds rose.

The economy expanded at the fastest quarter-on-quarter pace in two years, the central bank said yesterday, while Samsung Electronics Co.’s (005930) profit for the first three months beat forecasts. Earnings exceeded estimates at 73 percent of the 236 companies in the Standard & Poor’s 500 Index that posted results so far this season, data compiled by Bloomberg show. The yen gained 0.6 percent against the dollar, paring its six-month loss to 19 percent, before the Bank of Japan board meets today.

“Better-than-expected earnings at home and from the U.S. helped the won rise, along with the country’s GDP figure,” said Hong Seok Chan, a currency analyst at Daishin Economic Research Institute in Seoul. “All eyes are on Japan’s policy meeting today, and whether it will introduce new measures that could weaken the yen further.”

The won rallied 0.7 percent this week to 1,108.40 per dollar as of 10:25 a.m. in Seoul, according to data compiled by Bloomberg. The last time it advanced for three weeks or more in a row was the period ending Jan. 13. The currency gained 0.4 percent today, touching a four-week high of 1,107.85. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, fell 107 basis points to 7.28 percent this week and dropped 12 basis points today.

South Korea’s economy expanded 0.9 percent in the first quarter from the preceding three months, compared with 0.3 percent in the earlier period and the 0.7 percent growth forecast in a Bloomberg survey.

Samsung Result

Samsung Electronics, the world’s biggest maker of mobile phones, reported first-quarter profit of 7.15 trillion won ($6.4 billion) as it boosted sales of Galaxy handsets in emerging markets. That compared with net income of 5.05 trillion won a year earlier and the 6.73 trillion-won average of 36 analyst estimates compiled by Bloomberg.

Foreign investors bought $41 million more Korean stocks than they sold yesterday, the biggest daily inflow in two weeks, exchange data show. The Kospi Index of shares headed for its first weekly gain this month.

The slide in the yen has only started to affect the South Korean economy, central bank Governor Kim Choong Soo said April 24, adding that policy makers are closely looking at the Japanese currency’s movement. The won has climbed 10 percent against the yen this year, data compiled by Bloomberg show.

Consumer sentiment fell to 102 in April from a 10-month high of 104 in March, the Bank of Korea said in a statement today.

The yield on the 2.75 percent government bonds due March 2018 fell seven basis points this week to 2.6 percent, according to prices from Korea Exchange Inc. The yield dropped two basis points, or 0.02 percentage point, today.

To contact the reporter on this story: Seyoon Kim in Seoul at skim7@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net

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