South Korean Won Declines Most in a Week Before China PMI Report

The won fell by the most in a week as investors awaited a gauge of Chinese manufacturing to assess the health of South Korea’s biggest overseas market.

A preliminary reading for China’s Purchasing Managers’ Index for April was 48.3, compared with 48 in March, according to the median estimate in a Bloomberg survey before HSBC Holdings Plc and Markit Economics release the figure today. Fifty is the dividing line between contraction and expansion. South Korea’s economy probably expanded 0.8 percent in the first quarter from the previous three months, a separate survey showed before a central bank report due tomorrow.

“It seems investors are trading conservatively ahead of China PMI data,” said Baik Jin Kyu, a Seoul-based currency trader at Nonghyup Bank. “There is also speculation that importers are buying dollars.”

The won depreciated 0.2 percent, the most since April 15, to 1,039.28 per dollar as of 9:51 a.m. in Seoul, according to data compiled by Bloomberg. The currency touched 1,031.55 on April 10, the strongest level since August 2008, and its 2.4 percent rally this month is the best among 11 Asian currencies tracked by Bloomberg.

One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, fell 21 basis points, or 0.21 percentage point, to 6.39 percent, the data show.

The yield on the 3.125 percent government bonds due March 2019 was steady at 3.19 percent, according to Korea Exchange data.

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

To contact the editors responsible for this story: James Regan at jregan19@bloomberg.net Amit Prakash

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