Won Weakens for Second Day Before Bank of Korea Reviews Policy

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The won fell for a second day as Japan maintained its record stimulus program before the Bank of Korea reviews borrowing costs.

The Bank of Japan said Wednesday that it would keep expanding the monetary base at an annual pace of 80 trillion yen ($668 billion), as forecast by all 34 economists in Bloomberg survey. The BOK will hold its benchmark rate at a record low 1.75 percent on Thursday, according to all 16 analysts surveyed by Bloomberg. Nine of 25 see it cutting this year, a separate survey shows.

The won fell 0.2 percent to 1,090.97 a dollar as of the 3 p.m. close in Seoul, data compiled by Bloomberg show. It declined as much as 0.7 percent earlier. The Bloomberg Dollar Spot Index, which tracks the currency against 10 peers, has rallied 0.5 percent this week after falling 1.5 percent in the previous three days.

“We’ll have to watch whether the BOJ might signal larger asset purchases ahead,” as this would increase bets the BOK will ease, said Park Daebong, a Seoul-based currency trader at Nonghyup Bank. “The greenback seems to be recovering from recent weakness.”

The BOK, which has cut its benchmark interest rate three times since August, is due to update its economic forecasts at this week’s meeting. It has previously estimated 3.4 percent growth and 1.9 percent inflation for 2015.

Government bonds fell, pushing the yield on the 2 percent notes due December 2017 up one basis point, or 0.01 percentage point, to 1.73 percent, Korea Exchange prices show. The 10-year yield rose one basis point to 2.11 percent.

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