South Korea’s won jumped the most in almost three months and Taiwan’s dollar strengthened as the yen surged after Bank of Japan Governor Haruhiko Kuroda said it was hard to see his nation’s currency falling further.
The currencies led gains in Asia as Kuroda’s comments to Japanese lawmakers Wednesday indicated policy makers aren’t seeking further declines in the yen. The won and Taiwan’s dollar tend to track the yen as companies in the three economies compete for exports in global markets. While the Bank of Korea has cut interest rates and expressed concern about the yen’s weakness, Taiwan’s central bank has so far avoided any easing.
The won advanced 1 percent, the most since March 19, to close at 1,108 a dollar in Seoul, according to prices compiled by Bloomberg. Taiwan’s dollar rose 0.5 percent, its biggest increase since April, to end at 31.16, Taipei Forex Inc. prices show. Both declined against the yen.
The currencies “have a reasonable correlation with the yen’s movements, so it is no surprise to see both recover some poise in the aftermath of the sharp rebound in the yen,” Jonathan Cavenagh, a foreign-exchange strategist at Westpac Banking Corp. in Singapore, wrote in a research note today.
The yen surged as much as 1.5 percent versus the dollar after Kuroda spoke, and traded at 122.82 at 5:15 p.m. in Tokyo.
South Korean exports fell the most in six years in May and business groups said the weak yen is making it tougher to compete with Japanese companies.
President Park Geun Hye on Wednesday called for steps to revive exports as the won’s recent rise to a seven-year high against the yen hurts shipments. She also asked her cabinet to prepare “all preemptive measures” to minimize the impact of the outbreak of the Middle East respiratory syndrome, which left nine dead and put thousands in quarantine.
The spread of the deadly virus and falling exports are bolstering the case for the BOK to cut borrowing costs from a record low. Eleven of 18 economists analysts surveyed by Bloomberg see the BOK easing as early as Thursday.
Taiwan’s central bank routinely intervenes in the run-up to the close. In a sign of increased intervention, the spot rate has fallen an average 0.5 percent in the last hour of trading over the past month through Tuesday, compared with 0.2 percent in 2014.