South Korea’s won strengthened, reversing an earlier decline, as Chinese growth beat estimates and local exporters sold the U.S. currency to repatriate overseas earnings.
China’s gross domestic product increased 7.4 percent in the first quarter from a year earlier, the statistics bureau said today, more than the 7.3 percent forecast in a Bloomberg survey. The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major counterparts, was little changed after rising to a one-week high yesterday as Ukraine unleashed an offensive to dislodge militants and said Russian troops were identified among anti-government groups.
“There were expectations for a strong dollar today but better-than-expected China data and exporters selling the U.S. currency prompted investors to exit their long dollar position,” said Jahng Won, a currency trader at Shinhan Bank in Seoul. A long position is a bet an asset will increase in value.
The won strengthened 0.3 percent to 1,037.75 per dollar at the close in Seoul, according to data compiled by Bloomberg. It weakened as much as 0.4 percent earlier. One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, dropped 15 basis points, or 0.15 percentage point, to 7.04 percent.
South Korea should limit foreign-exchange intervention to the “exceptional circumstances of disorderly market conditions,” the U.S. Treasury Department said in a semi-annual report to Congress yesterday.
The yield on the 3.125 percent government bonds due March 2019 rose one basis point to 3.18 percent, Korea Exchange data show.