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Won Gains on Speculation Exporters Selling Dollars; Bonds Fall

Jan. 31 (Bloomberg) -- South Korea’s won advanced, snapping a two-day decline, on speculation exporters are selling dollars at the end of the month. Government bonds declined.

The currency weakened by as much as 0.2 percent earlier as data showed factory output shrank for a third month in December. Industrial production declined 0.9 percent from November, when it dropped a revised 0.3 percent, Statistics Korea said. The median estimate in a Bloomberg News survey was for a 1.1 percent gain. The Kospi Index of shares rose 0.8 percent after Greek Prime Minister Lucas Papademos said he’s “strongly committed” to reaching a debt-swap accord with bondholders.

“Exporters and heavy industrial companies selling dollars supported the won,” said Lee Yong Hee, a Seoul-based currency dealer with Industrial Bank of Korea. “Kospi gains following developments in Greece also triggered some risk-on moves.”

The won strengthened 0.4 percent to 1,123.26 per dollar at the close in Seoul, according to data compiled by Bloomberg. The currency jumped 2.6 percent in January, its first monthly gain since October. Overseas investors bought $5.3 billion more of the nation’s shares than they sold this month through yesterday, exchange data show.

A report tomorrow may show exports increased 1.1 percent this month from a year earlier, the least in more than two years, according to the median estimate in a Bloomberg survey.

Dollar buying may be supported by speculation U.S.-based Lone Star Funds may start converting the 3.9 trillion won ($3.5 billion) proceeds of its sale of Korea Exchange Bank to Seoul-based Hana Financial Group Inc., according to Ryoo Hyun Jung, a Seoul-based chief currency dealer at Citibank Inc. Hana won approval for its purchase on Jan. 27. Hana Chairman Kim Seung Yu said that day he plans to close the KEB purchase within five working days.

The yield on the government’s 3.5 percent bonds due September 2016 rose one basis point, or 0.01 percentage point, to 3.49 percent today, Korea Exchange Inc. prices show. It climbed five basis points this month.

To contact the reporter on this story: Jiyeun Lee in Seoul at

To contact the editor responsible for this story: Sandy Hendry at

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