South Korea’s won reversed earlier gains on concern Greece will fail to convince enough investors to sign up to a debt swap that will help the country stave off a default. Government bonds rose.
The currency fell for a second day before the restructuring deal closes on March 8, with the aim to reduce the amount of privately held Greek securities by 53.3 percent. South Korea’s economic outlook has deteriorated due to rising oil prices and Europe’s debt crisis, the finance ministry said today. The Australian dollar declined after the nation’s central bank left borrowing costs unchanged.
“Greek concerns and stock markets declining affected market sentiment,” said Cho Young Bok, a Seoul-based currency dealer at Daegu Bank. “Asian currencies move in line with the Australian dollar, and the Aussie falling after the Reserve Bank of Australia’s rate decision affected the won.”
The currency slipped 0.4 percent to 1,122.64 per dollar at the close in Seoul, after gaining as much as 0.2 percent earlier, according to data compiled by Bloomberg. The Kospi Index of shares fell for a second day as overseas funds sold more of the nation’s stocks than they bought.
The Bank of Korea will probably leave borrowing costs unchanged at 3.25 percent for a ninth month when it meets on March 8, according to all 16 economists surveyed by Bloomberg News.
The yield on South Korea’s 3.25 percent bonds due December 2014 declined two basis points, or 0.02 percentage point, to 3.50 percent, Korea Exchange Inc. prices show. Three-year debt futures climbed 0.04 percent to 104.08 and the one-year interest-rate swap fell one basis point to 3.53 percent.