South Korea’s won completed a sixth weekly gain, the longest rally since October 2013, as foreigners poured money into local stocks amid improving economic data.
Government bonds fell in the same period, with the 10-year yield jumping the most in almost two years, as South Korea’s economic growth quickened from the slowest since 2009 and consumer confidence rose to a six-month high. The data fueled speculation the Bank of Korea will refrain from adding to three interest-rate cuts since August when it meets next month. Overseas funds pumped $1.9 billion into local stocks this week, the latest exchange data show, the highest since September 2013.
The won climbed 0.4 percent from April 17 and 0.2 percent on Friday to 1,079.53 a dollar as of the 3 p.m. close in Seoul, data compiled by Bloomberg show. The currency is Asia’s second-best performer this month with a 2.8 percent advance. The won rose 0.7 percent versus the yen this week to 9.05.
“Stock market inflows were considerable this week, pressuring the won to strengthen,” said Son Eun Jeong, a Seoul-based currency analyst at Woori Futures Co. “Asian currencies and stocks generally rose and economic indicators look better, favoring the won.”
South Korea is closely monitoring the yen-won cross rate, a Finance Ministry official said Thursday, asking not to be identified citing internal policy. The two currencies tend to move in tandem as the nations compete for exports.
The exchange rate should be determined by the market and authorities are paying attention to sharp currency swings following Japan’s monetary easing, Yonhap Infomax reported, citing Finance Minister Choi Kyung Hwan Thursday.
The yield on the bonds due September 2024 jumped 17 basis points this week and one basis point Friday to 2.28 percent, Korea Exchange prices show. The three-year yield rose eight basis points, or 0.08 percentage point, from April 17 to 1.78 percent.
Gross domestic product increased 0.8 percent in the first quarter from the preceding three months, the BOK reported Thursday. That surpassed the median estimate of 0.6 percent in a Bloomberg survey of economists and 0.3 percent growth in the previous quarter. Consumer confidence rose to 104 in April, the highest since October 2014, indicating optimists outnumber pessimists, the central bank said in a statement Friday.
The central bank, which has lowered its benchmark rate to 1.75 percent in three moves over the past eight months, next meets on May 15. Economists are split over the odds of another move this year, with 12 of 27 analysts surveyed by Bloomberg in April forecasting a cut to 1.5 percent and 14 predicting no change. One foresees an increase to 2 percent.