South Korea’s won posted its first weekly decline in two months and government bonds fell amid a rout in global equities and debt.
The Kospi index of shares retreated for a second week and foreign funds turned net sellers from Thursday. The won also declined after Finance Minister Choi Kyung Hwan said May 7 the government will monitor the currency market closely as a weak yen will hurt South Korean exports. Ten-year bonds dropped for a fourth week.
The won lost 1.5 percent from April 30 to 1,088.34 a dollar in Seoul, data compiled by Bloomberg show. The currency rose 0.1 percent Friday. Local markets were shut May 1.
“Nervous foreign investors sought the safety of the dollar amid turmoil in the stock and bond markets,” said Hong Seok Chan, a Seoul-based currency analyst at Daishin Economy Research Institute. “The market is also wary of the authorities after Finance Minister Choi’s comments.”
The won retreated 1.2 percent versus the yen this week to 9.07, data compiled by Bloomberg show. South Korea and Japan compete to sell cars, steel and electronics goods in international markets.
The yield on government debt due September 2024 climbed three basis points, or 0.03 percentage point, from April 30 to 2.44 percent, Korea Exchange prices show. It fell 12 basis points on Friday, the biggest drop since it started trading in November. The three-year yield increased seven basis points this week and declined six basis points today to 1.91 percent.
Federal Reserve Chair Janet Yellen said Wednesday that Treasury yields are too low and could jump when the central bank raises borrowing costs, sparking broad-based selling in U.S., European and Japanese debt markets. Bonds rose Friday after steep declines earlier in the week.
Korea Housing Finance Corp. sold mortgage-backed securities Friday. The country’s sole issuer of bonds backed by home loans said on its website on April 23 it plans to offer around 3.8 trillion won ($3.48 billion) of such debt.