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Won Advances on Current-Account Surplus, Exporter Dollar Sales

March 31 (Bloomberg) -- South Korea’s won rose to a three-week high as exporters sold dollars and investors focused more on a widening current-account surplus than an exchange of artillery fire with the North.

The excess in the broadest measure of trade rose to $4.52 billion in February from $3.29 billion in the previous month, the central bank reported today. Exports probably expanded 4.2 percent in March from a year earlier, according to the median estimate in a Bloomberg survey before data due tomorrow. The trade figures will support positive views on the won, Jeon Seung Ji, a Seoul-based analyst for Samsung Futures Inc., wrote in a note today.

The won appreciated 0.4 percent to 1,064.70 per dollar at the close in Seoul, according to data compiled by Bloomberg. It touched 1,064.65, the strongest level since March 11. The currency advanced 0.3 percent for the month and weakened 0.9 percent for the quarter.

“Exporters selling the dollar at the quarter-end will support the won,” said Jude Noh, Seoul-based chief currency trader at Suhyup Bank. “Betting on further appreciation will be limited as recent easing of U.S. and Chinese economic concerns have already been reflected in the won’s gains.”

The currency posted the biggest five-day increase since September last week as Chinese Premier Li Keqiang said he is confident of keeping economic growth in a “reasonable range” and U.S. consumer confidence rose to a six-year high.

Artillery Fire

The South Korean military returned artillery shots after North Korean shells landed in South Korean waters during live-fire drills, the defense ministry in Seoul said. The exchange comes after North Korea yesterday said it may conduct a “new form” of nuclear test.

One-month implied volatility for the won, a gauge of expected moves in the exchange rate used to price options, rose 11 basis points, or 0.11 percentage point, to 6.90 percent. The Kospi index rose 0.2 percent to close at the highest level this year as overseas investors bought more local stocks than they sold for the fourth straight day.

“Little effect was seen in spot trading today as investors seem to dismiss the North’s provocations as a regular ritual,” said Bak Jae Sung, a Seoul-based currency dealer for Woori Bank. “Reactions from overseas investors in non-deliverable forwards after the Seoul market closed need to be seen.”

Government bonds were steady, with the yield on the 3.125 percent sovereign bonds due March 2019 little changed at 3.16 percent, Korea Exchange data show.

To contact the reporter on this story: Jiyeun Lee in Seoul at jlee1029@bloomberg.net

To contact the editors responsible for this story: James Regan at jregan19@bloomberg.net Robin Ganguly, Anil Varma

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