South Korea’s won climbed for a second day on speculation exporters are selling dollars to meet month-end expenses. Government bonds gained.
Reviving Asia’s fourth-largest economy will be the focus of government policy in 2014, Finance Minister Hyun Oh Seok said at a meeting in Seoul today. The authorities are keeping a close watch on the foreign-exchange market and monitoring the won’s volatility, Hyun told reporters. The currency will rise beyond 1,000 per dollar next year as it is regarded as a “safe haven” because of South Korea’s foreign reserves and current-account surplus, Philip Wee, senior currency economist at DBS Bank Ltd. in Singapore, wrote in a Nov. 22 research note.
“Exporters are selling dollars as it’s nearing the end of the month,” said Han Sung Min, a currency trader at Busan Bank in Seoul. “Lower volatility is being seen in the market with no big external factors.”
The won rose 0.2 percent to 1,058.80 per dollar as of 9:44 a.m. in Seoul, according to data compiled by Bloomberg. That’s 0.4 percent off a two-year high of 1,054.35 reached Oct. 24. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, declined eight basis points, or 0.08 percentage point, to 6.17 percent.
The Bank of Korea cut its economic growth outlook for 2014 on Oct. 10 to 3.8 percent from the 4 percent it projected in July, citing a weaker-than-expected global economy. South Korea may report a current-account surplus of $63 billion this year, the central bank forecast last month, increasing its previous July estimate of $53 billion.
The yield on the 2.75 percent sovereign notes due June 2016 fell one basis point to 2.95 percent in Seoul, according to Korea Exchange Inc prices.
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