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Korea Won Trades Near Two-Month Low on China Manufacturing Data

March 22 (Bloomberg) -- South Korea’s won traded near its weakest level in two months as a preliminary survey showed China’s manufacturing may have shrunk for a fifth month, damping the outlook for exports. Government bonds were steady.

An index of factory output in the world’s second-largest economy and South Korea’s biggest overseas market was at a four-month low of 48.1 in March, HSBC Holdings Plc and Markit Economics reported today. A number below 50 indicates contraction. Federal Reserve Chairman Ben S. Bernanke told Congress yesterday that higher energy prices may weaken the U.S. economy and that Europe’s financial and economic situation “remains difficult.”

The won was little changed at 1,129.58 per dollar, according to data compiled by Bloomberg. It touched 1,132.38 earlier, the weakest level since Jan. 20.

“The won fell in earlier trading as China’s manufacturing data was below expectations,” said Han Sung Min, a currency dealer at Busan Bank in Seoul. “It pared losses on speculation exporters sold the dollar to convert income.”

The currency’s one-month implied volatility, a measure of exchange-rate swings used to price options, fell 13 basis points to 8.15 percent.

The yield on the 3.25 percent notes due December 2014 was steady at 3.62 percent, Korea Exchange Inc. prices show. Three-year debt futures fell 0.02 percent to 103.51. The one-year interest-rate swap declined one basis points, or 0.01 percentage point, to 3.56 percent.

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

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net

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