South Korea’s won rose to the highest level in almost four months as global funds boosted their holdings of the nation’s equities by the most since September 2013.
Foreign funds bought $597 million more shares than they sold on Wednesday, a 12th straight day of net purchases, exchange data show. The Bloomberg Dollar Spot Index snapped a two-day gain on speculation the U.S. will raise interest rates at a gradual pace, with the head of the Federal Reserve Bank of New York having said in New York on Monday that increasing rates doesn’t mean monetary policy will be “tight.”
The won advanced 0.4 percent to close at 1,079.59 a dollar in Seoul, data compiled by Bloomberg show. It climbed as high as 1,078.30, the strongest level since Jan. 28, and is Asia’s best performer this month with a 2.8 percent advance. The Kospi index of shares ended the day 0.1 percent shy of Monday’s closing level of 2,146.73, which was the highest since August 2011.
“It was a combination of foreigner’s stock buying and the dollar’s retreat that pushed the won upwards,” said Dong-Wook Kim, a currency trader at Kookmin Bank in Seoul. “Sentiment is towards selling the greenback against the won.”
Sovereign bonds were steady. The yield on the 2 percent bonds due December 2017 was little changed at 1.71 percent, Korea Exchange prices show.
South Korea’s gross domestic product probably increased 2.3 percent in the first quarter from a year earlier, according to the median estimate of economists surveyed by Bloomberg before data due Thursday. That’s less than the 2.7 percent growth recorded for the final three months of 2014 and would mark the slowest expansion in two years.
The government will consider measures to support the economy if needed in the second half, Finance Minister Choi Kyung Hwan said in Seoul on Tuesday. He told parliament that it’s too early to discuss an additional budget, and the government will try to minimize the tax revenue shortfall this year.