South Korean Won Touches One-Week High as Emerging Markets Rally

South Korea’s won rose to the strongest level in more than a week as an emerging-market rally pushed Asian currencies higher ahead of the new Federal Reserve chairman’s first policy report to lawmakers.

The markets will watch Janet Yellen’s testimony tomorrow to weigh how aggressively the central bank will trim the monthly stimulus that fueled developing-nation inflows. U.S. payrolls rose 113,000 in January, less than the 180,000 projected in a Bloomberg survey, while the unemployment rate fell to the lowest since 2008. The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most active currencies outside Japan, rose last week for the first time in a month.

“The payroll data was weak, but with unemployment posing a positive signal to economy recovery, it seems the currency market is stabilizing,” said Yun Se Min, a Seoul-based currency trader at Busan Bank. “The won will be further supported if exporters sell dollars to repatriate income.”

The won gained 0.2 percent to 1,071.97 per dollar as of 10:12 a.m. in Seoul, according to data compiled by Bloomberg. It earlier rose to 1,071.75, the strongest since Jan. 29. One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, fell 32 basis points to 7.09 percent.

The yield on the 3 percent government bonds due December 2016 declined one basis point, or 0.01 percentage point, to 2.85 percent, according to Korea Exchange Inc. prices. That matched the lowest level this year.

“While the payroll data is supporting Korean bonds today, buying momentum is weak as yields have already fallen to significantly low levels,” said Park Dongjin, a fixed-income analyst at Samsung Futures Inc. in Seoul.

To contact the reporter on this story: Jiyeun Lee in Seoul at jlee1029@bloomberg.net

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