Won Rises to Seven-Week High on Stock Gains, Exporter Demand

South Korea’s won climbed to the strongest level in seven weeks as gains in global equities supported demand for emerging-market assets.

The Kospi index of local shares rose for a fourth day after the Standard & Poor’s 500 Index reached an all-time high yesterday. The won was also bolstered by exporters selling dollars near the month-end. South Korea’s overseas shipments increased 0.4 percent this month from a year earlier following a 5.4 percent gain in July, according to the median estimate in a Bloomberg survey of analysts before data due Sept. 1.

“Equity gains are supporting the won, and recently we’ve seen bullish dollar bets wane as exporters sell the greenback whenever the won weakens,” said Jahng Won, a currency trader for Shinhan Bank in Seoul. Investors will be cautious about intervention by the authorities as the won appreciates, he said.

The won rose 0.3 percent to 1,014.28 per dollar at the close in Seoul, according to data compiled by Bloomberg. It touched 1,013.66 earlier, the strongest since July 10. One-month implied volatility, a gauge of expected swings in the exchange rate used to price options, fell 11 basis points, or 0.11 percentage point, to 5.85 percent.

South Korea’s monetary authorities were suspected of doing smoothing operations today to curb the won’s appreciation, according to Jeon Seung Ji, a Seoul-based currency analyst for Samsung Futures Inc.

Consumer sentiment remains weak following the deadly ferry sinking in April and companies are reluctant to invest in facilities due to the uncertain outlook, Bank of Korea said in its quarterly report today on domestic regional economies.

The yield on the nation’s 3.5 percent government bonds due March 2024 dropped for a third day, declining three basis points to 3.04 percent, Korea Exchange Inc. prices show. That’s the lowest level in more than two weeks.

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, Simon Harvey

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