Dec. 20 (Bloomberg) -- South Korea’s won fell from a 15-month high after the ruling party’s Park Geun Hye was elected first female president, damping speculation of a major shift in the nation’s exporter-friendly policies. Bonds advanced.
Park defeated main opposition nominee Moon Jae In by 51.6 percent to 48 percent in yesterday’s poll, according to the National Election Commission. Park has called for tighter regulation of family-owned conglomerates such as Samsung Group, but stopped short of Moon’s call for banning existing as well as new cross-shareholdings. U.S. shares fell yesterday on concern lawmakers are struggling to reach agreement on budget changes.
“The ruling New Frontier Party is more corporate friendly than the opposition, which means less tolerance for a stronger won,” said Jeon Seung Ji, a Seoul-based currency analyst at Samsung Futures Inc. “There is caution against government intervention considering what we saw on Dec. 18, and also the U.S. budget deal is a continuous concern.”
The won weakened 0.2 percent to 1,074.85 per dollar at the close in Seoul from Dec. 18 when it touched a 15-month high of 1,070.73. Local markets were closed yesterday for the election.
The currency extended losses in late trading after importers bought the greenback to settle bills and as some investors covered their short positions on the dollar, according to Cho Young Bok, a Seoul-based currency trader for Daegu Bank. A short position is a bet an asset will decline in value.
One-month implied volatility, a measure of expected moves in exchange rates used to price options, was little changed at 4.75 percent. That is down from 13.55 percent at the start of this year. The won has strengthened 7.2 percent in 2012, the best performance among Asia’s 11 most-used currencies.
Park’s victory “means policy stability and continued opposition of the Bank of Korea towards faster won gains,” Dariusz Kowalczyk, a strategist at Credit Agricole CIB in Hong Kong, wrote in a research note today. “As opposition candidate Moon would have likely favored a firmer currency, the unit should correct today.”
The yield on South Korea’s 2.75 percent bonds due September 2017 fell one basis point, or 0.01 percentage point, to 3.04 percent, Korea Exchange Inc. prices show. The one-year interest-rate swap slipped one basis point to 2.81 percent.
President Barack Obama’s administration officials told leaders of business and financial services groups yesterday that negotiations on budget talks with House Speaker John Boehner have deteriorated in the last 24 hours, according to a person familiar with the meeting.
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