The won dropped for a fifth day, the longest run of declines in 10 months, after South Korea’s unemployment rate unexpectedly climbed to the highest in a year. Government bonds advanced.
The jobless rate climbed to 3.5 percent in February, a government report showed today, more than the 3.2 percent median estimate of 13 economists in a Bloomberg survey. South Korea’s import prices gained 2.7 percent last month from January, according to a separate report from the central bank. Twelve out of 16 economists surveyed by Bloomberg predict the Bank of Korea will keep interest rates steady at a review tomorrow.
The “unemployment rate unexpectedly jumped to 3.5 percent from 3.2 percent, and the breakdown of the data was quite negative, which could revive rate-cut hopes,” Dariusz Kowalczyk, a Hong Kong-based strategist at Credit Agricole CIB, said in a note today. The report “will weigh on the Korean won as a decline in payrolls and higher unemployment are negative for growth,” he wrote.
The won declined 0.2 percent to 1,097.45 per dollar in Seoul, according to data compiled by Bloomberg. The currency touched 1,102.65 on March 11, the weakest level since October, and its five-day losing streak is the longest since May 16. One-month implied volatility for the won, a measure of expected moves in the exchange rate used to price options, rose 11 basis points, or 0.11 percentage point, to 7.96 percent.
Asia’s fourth-biggest economy needs a policy boost, South Korea’s incoming finance minister Hyun Oh Seok told lawmakers a day before the central bank’s monetary-policy review. Gross domestic product may grow in a 2 percent range this year, Hyun said. That compares with the Bank of Korea’s 2.8 percent forecast.
The yield on the 2.75 percent bonds due September 2017 fell three basis points to 2.76 percent, according to prices from Korea Exchange Inc.