South Korea’s won rose to within 0.1 percent of a nine-month high after global funds extended a buying spree of local shares. Government bonds were unchanged.
The currency recovered earlier losses as foreigners bought more South Korean stocks than they sold for a record 38th day, exchange data show. The won traded in a narrow range before U.S. jobs data that may offer clues about the timing of a reduction in stimulus that has fueled emerging-market inflows. The world’s largest economy added 180,000 jobs last month after boosting positions by 169,000 in August, according to the median estimate of economists surveyed by Bloomberg. Today’s report, delayed by a 16-day government shutdown, was originally slated for Oct. 4.
“Foreign investors are buying shares non-stop,” said Jude Noh, the chief currency trader at Suhyup Bank in Seoul. “The U.S. jobs report is likely to meet the expectations, although the market impact may be limited since the figures won’t reflect the shutdown.”
The won climbed 0.1 percent to close at 1,060.95 per dollar in Seoul, after sliding as much as 0.2 percent, according to data compiled by Bloomberg. It touched 1,059.75 yesterday, the strongest level since Jan. 21. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, dropped 14 basis points, or 0.14 percentage point, to 5.95 percent.
Federal Reserve Chairman Ben S. Bernanke said in June the central bank may start reducing $85 billion of monthly bond purchases if the U.S. economy grows as projected.
Intervention in the currency market by the Bank of Korea is expected to continue and the won trading below 11 per Japanese yen is a “major worry,” Brown Brothers Harriman & Co. strategists including New York-based Marc Chandler wrote in a research note yesterday. South Korea is monitoring fund inflows and currency moves to identify speculative activities and will prevent “herd behavior,” Finance Ministry Director Kim Seong Wook said Oct. 18.
The won traded at 10.79 per yen and has advanced 28 percent in the past year, according to data compiled by Bloomberg. A stronger currency makes it harder for South Korean exporters such as Samsung Electronics Co. and Hyundai Motor Co. to compete against Japanese rivals overseas.
The yield on South Korea’s 2.75 percent sovereign bonds due June 2016 was unchanged at 2.84 percent, according to Korea Exchange Inc. prices.