The currency advanced 0.3 percent to 1,091.45 per dollar in Seoul, climbing for a third day, according to data compiled by Bloomberg. It touched 1,091.31 earlier, the highest since March 8. The won has appreciated 3.9 percent against the greenback in the past month and 6.9 percent versus the yen, making the nation’s goods less competitive with Japan.
Hyundai Heavy Industries Co. said yesterday it received a $700 million order to build the world’s biggest container ships from 2014, adding to speculation of more dollar inflows. Bank of Korea Governor Kim Choong Soo said May 5 he expects the yen to continue to weaken, intensifying competition in industries including automobiles, according to Yonhap News.
“Exporter dollar sales and expectations for future dollar supplies from shipbuilders supported the won,” said Hong Seok Chan, a currency analyst at Daishin Economic Research Institute in Seoul. “Still, investor concerns that authorities may step in to try to slow the gains helped limit further appreciation.”
One-month implied volatility, a measure of expected moves in the exchange rate used to price options, dropped 14 basis points, or 0.14 percentage point, to 6.73 percent, data compiled by Bloomberg show.
Kim said May 5 that last year’s cuts in the benchmark interest rate totaling 50 basis points were “very big,” Yonhap News reported. Fourteen of 20 analysts surveyed by Bloomberg forecast the seven-day repurchase rate will be left at 2.75 percent at a policy meeting on May 9, while six predict a 25 basis-point cut.
The Bank of Korea has kept borrowing costs unchanged since October, defying pressure from the government for a reduction even as a weaker yen threatens to hurt exports.
The yield on the 2.75 percent bonds due March 2018 dropped one basis point to 2.61 percent in Seoul, according to prices from Korea Exchange Inc. The yield jumped 10 basis points yesterday, the biggest increase since April 11, after Governor Kim hinted borrowing costs may be kept unchanged.
To contact the reporter on this story: Seyoon Kim in Seoul at firstname.lastname@example.org