Won Declines to One-Week Low on Fed Rate Bets, Korea Export Data

  • South Korean overseas sales extend slide into September
  • Three-year sovereign bond yield rises from record low

The won fell for a second day after Federal Reserve officials voiced support for increasing U.S. borrowing costs and South Korea’s exports headed for the ninth straight month of declines.

The Bloomberg Dollar Spot Index, a measure of the greenback against 10 peers, rose Monday as Atlanta Fed President Dennis Lockhart said he remains confident the central bank will raise interest rates this year. His comments followed similar remarks by three other regional Fed presidents over the weekend, after the monetary authority kept its key rate near zero last week. South Korea’s exports decreased 6.4 percent in the first 20 days of September from a year earlier, Customs Service data showed Monday.

The won retreated 0.4 percent to close at 1,179.17 a dollar in Seoul, data compiled by Bloomberg show. The currency earlier dropped to as low as 1,179.80, the weakest since Sept. 16, and its two-day decline of 1.4 percent was the biggest since Sept. 3.

"The currency market is betting on higher U.S. rates again," said Jeon Seung Ji, a currency analyst at Samsung Futures Inc. in Seoul. "Sluggish exports and external uncertainties will increase currency swings, and more exporters will opt to sell dollars versus the weaker won before the month-end."

The Fed’s possible rate increase and depreciation of the Chinese yuan pose challenges to South Korea, which is dependent on external economies and has an open capital market, Vice Finance Minister Joo Hyung Hwan said in Seoul on Monday. September’s exports remain weak due to a global slowdown, he said.

Government bonds fell, pushing the three-year yield up one basis point to 1.63 percent, Korea Exchange prices show. It reached to a record 1.62 percent on Monday. The 10-year yield was little changed at 2.16 percent.

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