South Korea’s won dropped to the weakest level in almost four years on concern the nation’s export outlook is worsening as the U.S. moves closer to raising interest rates.
Exports have deteriorated amid a global economic slowdown, Trade Minister Yoon Sang Jick said in a prepared comments released by the ministry on Monday after the country last week reported that shipments in August fell the most since 2009. The Bloomberg Dollar Spot Index, which tracks the greenback against 10 peers, rose to a four-week high on Friday as data showed U.S. unemployment is at the lowest level since 2008, supporting the case for an interest-rate increase.
The won declined 0.9 percent, the most since Aug. 12, to close at 1,204.02 a dollar in Seoul, according to data compiled by Bloomberg. The currency fell to 1,207.07 earlier, the weakest level since October 2011. It has lost 2.7 percent in the four days through Monday.
“The won is playing catch-up to the U.S. jobs report,” said Khoon Goh, a senior foreign-exchange strategist at Australia & New Zealand Banking Group Ltd. in Singapore. “I don’t expect the Bank of Korea to intervene. They aren’t displeased by a weakening won as the export sector isn’t strong and the overall economy remains sluggish.”
The Bank of Korea reduced its benchmark interest rate to an unprecedented 1.5 percent in June and next meets to review borrowing costs on Friday. The yield on government bonds due June 2025 fell two basis points to 2.23 percent, the lowest in two weeks.
The government doesn’t prefer high volatility in the market, according to Jude Noh, chief currency trader at Suhyup Bank in Seoul. It is unlikely that the won will break 1,208 per dollar, Noh said.