Won Snaps Two-Day Drop on South Korea Jobs Policy; Bonds Rise
The won snapped a two-day drop as South Korea said it will boost policies to add service-industry jobs and Goldman Sachs Group Inc. affirmed its view that the currency will gain this year. Government bonds rose.
Finance Minister Hyun Oh Seok said today the government will provide more support to enhance competitiveness and employment in some “promising” areas to help fuel economic growth. A Goldman Sachs report maintained the bank’s prediction the won will climb to 1,110 per dollar in three months.
The won strengthened 0.5 percent to 1,138.45 per dollar in Seoul, according to data compiled by Bloomberg. One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, fell 33 basis points, or 0.33 percentage point, to 10.58 percent.
“The government has been giving supportive comments and the Goldman Sachs’ view on the won may help lift market sentiment,” said Jeon Seung Ji, an analyst at Samsung Futures Inc. in Seoul. “Investors are likely to remain cautious as U.S. markets are shut for a holiday today, and before tomorrow’s jobs report that may offer clues about the Federal Reserve’s stimulus-exit strategy.”
U.S. employers added 165,000 jobs in June following an increase of 175,000 in May, according to the median forecast in a Bloomberg survey of economists before official figures due tomorrow. Claims for jobless benefits decreased by 5,000 to 343,000 in the week ended June 29, the Labor Department said yesterday in Washington, and a private report showed companies added more workers to payrolls in June than forecast.
Fed Chairman Ben S. Bernanke said June 19 the central bank may slow bond purchases this year and end them in 2014 if economic growth meets its estimates. U.S. markets are closed today for the Independence Day holiday.
The yield on the 2.75 percent bonds due June 2016 fell two basis points to 2.94 percent, prices from Korea Exchange Inc. show.
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