South Korea’s won strengthened to a 14-month high as the re-election of U.S. President Barack Obama eased concern the Federal Reserve will rein in monetary stimulus, supporting inflows to emerging markets.
Republican challenger Mitt Romney had said he wouldn’t reappoint Fed Chairman Ben S. Bernanke to a third term in 2014. The Fed said in September it will expand holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month to support the economy. The Kospi index of shares rose for a second day as overseas investors bought more South Korean equities than they sold.
“Obama winning the U.S. election is driving gains in Asian currencies on bets that Fed easing will continue,” said Byeon Ji Young, a Seoul-based currency analyst for Woori Futures Co. “We saw overseas investors sell the greenback as the won strengthened beyond 1,090 per dollar, a level speculated to have been recently protected by the government.”
The won rose 0.5 percent to close at 1,085.45 per dollar in Seoul, according to data compiled by Bloomberg. It touched 1,085.40 earlier, the highest level since Sept. 9, 2011. One-month implied volatility, a measure of exchange-rate swings used to price options, fell 18 basis points, or 0.18 percentage point, to 5.10 percent.
South Korea’s currency market will open at 10 a.m. tomorrow, one hour later than usual, to help reduce traffic for the national college entrance examinations, the Seoul Foreign Exchange Market Committee said in an e-mailed statement yesterday. It will close at the scheduled time of 3 p.m.
The Bank of Korea will probably hold the benchmark interest rate at 2.75 percent at its Nov. 9 policy meeting, according to all 16 economists surveyed by Bloomberg News.
The yield on the government’s 3.25 percent bonds due June 2015 was unchanged at 2.78 percent, Korea Exchange Inc. prices show. The one-year interest-rate swap was little changed at 2.75 percent.