Daewoo Shipbuilding & Marine Engineering Co. got a 572.8 billion won ($534 million) order to build a large jack-up rig for Denmark’s Maersk Drilling, the company said in a regulatory filing yesterday. The won appreciated 6.2 percent this quarter, Asia’s best performance, as global funds added almost $9.4 billion to their holdings of equities in the period, exchange data show.
“There are dollar supplies from shipbuilders and other exporters as the end of month draws near,” said Park Jung Hyun, a Seoul-based currency dealer at Hana Bank. “The won’s rising trend remains in place, though the government may smooth out any sharp gains.”
The won advanced 0.2 percent to 1,075.19 per dollar in Seoul, after yesterday’s 0.5 percent drop, which was the biggest decline in a month, according to data compiled by Bloomberg. It touched 1,072.31 on Sept. 24, the strongest level since Jan. 25. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, dropped six basis points, or 0.06 percentage point, to 7.20 percent.
Credit Suisse Group AG raised its three-month forecast for the won to 1,060 from 1,075, citing South Korea’s current-account surplus and capital inflows. “The Bank of Korea is likely to continue intervening to manage the pace of won appreciation, but we expect it to be overwhelmed by the magnitude of inflows,” strategists including Singapore-based Ray Farris wrote in a report yesterday.
Policy makers must take “proactive” steps to deal with financial instability, while continuing to push through structural reforms, Bank of Korea Governor Kim Choong Soo said at a conference in Seoul today. Asian emerging-market economies face risks, including volatile capital flows and slowing growth, and the Federal Reserve’s decision to delay its stimulus may provide short-term “relief,” Kim said.
The yield on South Korea’s 3.25 percent note due September 2018 rose five basis points to 3.09 percent, Korea Exchange Inc. prices show. The yield on the 2.75 percent bond due June 2016 rose two basis points to 2.85 percent.