Korean Won Extends Rebound With Global Stocks Before GDP Report

  • Fourth-quarter growth may have quickened, slowed for year
  • Rally in oil has helped support turnaround in sentiment

The won posted its biggest two-day gain since October as global markets extended Friday’s rebound and investors bet a government report will show South Korea’s fourth-quarter growth quickened from a year ago.

Asian stocks rose along with oil and the won strengthened beyond its 21-day moving average for the first time in three weeks on optimism Japan and the European Central Bank will add monetary stimulus, boosting risk appetite after a selloff earlier in January. While gross domestic product is seen to have gathered momentum in the final three months of 2015, it probably slowed to the least since 2012 for the full year, according to a Bloomberg survey.

The currency led gains in Asia and appreciated 0.5 percent to close at 1,194.20 a dollar in Seoul, according to data compiled by Bloomberg. It rose on Monday to 1,192.02, the highest level since Jan. 8, and appreciated 1.1 percent on Friday. The Kospi index of shares advanced 0.7 percent, building on the 2.1 percent rally of Jan. 22.

"Risk assets will enjoy a typical short-term relief rally as sentiment improves," said Yuna Park, a foreign-exchange and fixed-income analyst at Seoul-based Dongbu Securities Co. who predicts the won could strengthen to 1,185 this week. "Korean exporters will also start to sell the dollar as month-end approaches, adding to upward pressure on the won."

GDP rose 3 percent in the three months through December compared with 2.7 percent in the previous period, the median estimate in Bloomberg’s survey shows. It’s seen at 2.6 percent for the full year.

Global risk aversion in the wake of a plunge in oil and concern about China’s economy has prompted investors to pull about $2.4 billion from Korean equities in January. The won has fallen 1.8 percent, making it the second-worst performer in Asia. It dropped to a five-year low last week.

South Korea’s government bonds rose, pushing the 10-year yield down two basis points to 2.02 percent, Korea Exchange prices show. The yield on the securities due 2018 fell one basis point to 1.62 percent.

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