Won Completes Best Week in Two Months as Exporters Sell Dollars

South Korea’s won completed its biggest weekly gain since October amid speculation exporters are accelerating repatriation of overseas income ahead of the year-end book closing. Government bonds rose.

The currency appreciated 8.5 percent since June-end, the most among the 11 most-traded Asian currencies tracked by Bloomberg. The nation’s export growth quickened in the second half, Finance Minister Hyun Oh Seok said at a briefing in Seoul today. South Korean authorities are monitoring the currency market for possible herd behavior, Hyun said Dec. 10.

“There was a stream of dollar sales from engineering and electronics makers and shipbuilders this week, and there seems to be more to come,” said Han Sung Min, a Seoul-based currency dealer at Busan Bank. “Upward pressure on the won will remain, although the market is on the lookout for intervention.”

The won strengthened 0.5 percent this week to 1,052.55 per dollar in Seoul, the biggest gain since the period ended Oct. 18, data compiled by Bloomberg show. It fell 0.2 percent today. One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, rose 40 basis points, or 0.40 percentage point, today to 6.5 percent.

Asia’s fourth-largest economy posted a $4.8 billion trade surplus in November, compared with a four-month high of $4.9 billion in October, official data show.

The won will trade between 1,020 and 1,080 over the next three to four months because of government intervention as well as expectations of U.S. tapering, Ryan Oh, head of asset allocation strategy at Cosmo Asset Management in Seoul, said in an e-mail interview yesterday.

The yield on the 3 percent sovereign bonds due December 2016 fell five basis points this week and today to 2.96 percent, Korea Exchange Inc. prices show.

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