South Korean Won Closes Near Two-Week Low on Stock Outflows

  • Foreigners net sell $1.79 billion Korean shares this quarter
  • Won extends year's decline to 5.6 percent as Kospi drops

The won closed near a two-week low as global funds offloaded South Korean shares before a potential U.S. interest-rate increase and as data showed slumping exports curbed growth in Asia’s fourth-largest economy.

A dollar gauge rose to the strongest level in more than a decade on Wednesday after Federal Reserve Chair Janet Yellen said the U.S. economy is ready for higher borrowing costs. Overseas investors sold more Korean shares than they bought for a second day, taking this quarter’s sales to $1.79 billion. Exports in the June-September period fell more than an initial estimate and were the biggest drag on growth since 2013, according to the Bank of Korea.

The won dropped as much as 0.5 percent to the weakest level since Nov. 18 before paring its losses to close at 1,164.55 in Seoul, data compiled by Bloomberg show. The currency extended this year’s decline to 5.6 percent. The Kospi index of shares fell 0.8 percent.

"Offshore investors buying dollars to repatriate money from stock sales is the main driver," said Park Dae Bong, a senior currency trader at Nonghyup Bank in Seoul. "Dollar buying looks to be the appropriate strategy for now."

Net exports stripped 0.8 percentage point from quarter-on-quarter growth in the three months through September, while domestic demand added 2 percentage points, according to BOK figures released on Thursday. The central bank said the economy expanded a revised 1.3 percent from the second quarter, the quickest pace since 2010. South Korea’s foreign-exchange reserves fell for the first time in three months in November to $368.5 billion, the authority said in a separate report.

Ten-year government bonds declined, with the yield rising one basis point to 2.27 percent, Korea Exchange prices show. The three-year yield was little changed at 1.76 percent.

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