South Korea’s won fell the most in almost two months as overseas funds pulled money from local markets amid a rout in global equities and debt.
Foreigners turned net sellers of Korean shares on Thursday for the first time this week as the Kospi index fell for a second day. The won also retreated after Finance Minister Choi Kyung Hwan said a weak yen will hurt South Korean exports such as cars and steel. Government bonds fell amid a selloff from the U.S. to Japan after Federal Reserve Chair Janet Yellen said Wednesday that Treasury yields are too low and could jump when the central bank raises borrowing costs.
The won declined 0.9 percent, the biggest drop since March 10, to 1,089.57 a dollar as of the 3 p.m. close in Seoul, data compiled by Bloomberg show. The Kospi fell 0.7 percent and the MSCI Asia Pacific Index of stocks slipped 1.1 percent.
“There is talk of foreign funds reducing South Korean assets,” said Park Daebong, a Seoul-based currency trader at Nonghyup Bank. “Offshore investors are selling off the won.”
Ten-year bonds fell for the ninth-day, the longest losing streak since they began trading in November. The yield on the note due September 2024 rose two basis points, or 0.02 percentage point, to 2.56 percent, Korea Exchange prices show. The three-year yield climbed two basis points to 1.97 percent.
Korea Housing Finance Corp. plans to offer around 3.8 trillion won ($3.55 billion) of bonds backed by home loans Friday, the country’s sole issuer of mortgage-backed securities said on its website on April 23.
“Sentiment is against bonds globally, and that’s also making South Korean investors reluctant to buy government debt,” said Seo Hyang Mi, a Seoul-based fixed-income analyst for HI Investment & Securities Co. “There are also worries over how the MBS issuance will play out, and the market is uncertain about the auction result.”
South Korea’s foreign-exchange reserves rose to a record $369.9 billion at the end of April as strength in currencies other than the dollar raised the value of holdings when converted, the Bank of Korea said Thursday.