Won Snaps Two-Day Fall as Shipbuilder Wins Contract; Bonds Drop
South Korea’s won snapped a two-day decline after a shipbuilder won an order and before the Federal Reserve releases minutes of its July meeting that may offer clues on its stimulus-tapering plans. Government bonds fell.
Samsung Heavy Industries Co. received a 441.6 billion won ($395 million) order for two ships, according to a regulatory filing yesterday. South Korea’s short-term external debt was $119.6 billion at the end of June, $2.6 billion lower than in the previous quarter, Bank of Korea said in a statement today. The Federal Open Market Committee will publish the minutes of its meeting today.
“News on a shipbuilder’s overseas deal may support the currency while investors are in wait-and-see mode in general before the FOMC minutes release,” said Choi Sung Hyun, a currency trader at Woori Bank in Seoul.
The won rose 0.3 percent to 1,117.49 per dollar as of 10:28 a.m. in Seoul, according to data compiled by Bloomberg. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, declined three basis points, or 0.03 percentage point, to 7.78 percent.
South Korea’s government will closely watch for any possible outflows of foreign funds from local debt on concern the Fed will reduce its $85 billion of bond purchases, the Finance Ministry said in a statement today.
The yield on the 2.75 percent government bonds due June 2016 climbed one basis point to 2.95 percent, Korea Exchange Inc. prices show.
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