South Korea’s won rose to a three-week high and government bonds fell after a pickup in U.S. manufacturing brightened the outlook for exports and spurred demand for riskier assets.
The U.S. Institute for Supply Management’s factory index in the climbed to a six-month high of 53.9 in December, figures showed yesterday. Fifty is the dividing line between growth and contraction, and economists surveyed by Bloomberg News forecast a reading of 53.5. Output in China and India also gathered pace in December, according to data this month.
“Manufacturing data from major economies are easing global economy slowdown concerns, supporting the won,” said Hong Seok Chan, a Seoul-based currency analyst at Daeshin Securities Co.
The won rose 0.2 percent to 1,148.60 per dollar in Seoul, according to data compiled by Bloomberg. The currency touched 1,144.49 earlier, the strongest level since Dec. 12. It trimmed gains as importers bought dollars to settle bills, according to Yun Se Min, a currency dealer at Busan Bank in Seoul. The Kospi Index of shares reversed earlier gains and fell 0.5 percent.
South Korea and China will announce the beginning of free-trade agreement talks “soon” when President Lee Myung Bak and Chinese counterpart Hu Jintao meet in Beijing, the Dong-a Ilbo newspaper reported today, citing unidentified Korean government officials. President Lee will visit China for three days starting Jan. 9, the presidential office said today in a statement.
South Korea will strengthen monitoring of the economy and financial markets to deal with possible risks including the European debt crisis and a rise in raw-material prices, the finance ministry said yesterday. Policy makers will also seek measures to ease volatility of capital flows to ensure stability in the foreign-exchange market, the ministry said.
The yield on South Korea’s 3.5 percent bonds due September 2016 climbed one basis point, or 0.01 percentage point, to 3.49 percent, according to Korea Exchange Inc. prices.