- New BOK board members seen `more dovish': Dongbu Securities
- Won gains with stocks as exporters seen selling dollars
South Korea’s government bonds rose, pushing yields to the lowest in four weeks, on speculation new board members named by the central bank will favor cutting record-low interest rates.
The four new candidates announced by the Bank of Korea on Monday need to be approved by President Park Geun Hye and will replace policy makers whose terms on the seven-member board end on April 20. While the BOK held the benchmark rate at 1.5 percent for a ninth month at its March 10 meeting, one member called for a 25 basis point cut, according to minutes released Tuesday.
“The market regarded the incoming board members as more dovish than outgoing ones," said Moon Hong Cheol, a fixed-income analyst at Dongbu Securities Co. in Seoul. “There are more chances of policy-rate cuts than before."
The yields on three- and 10-year notes fell three basis points each to to 1.46 percent and 1.81 percent, respectively, in Seoul, Korea Exchange prices show. The levels are the lowest since Feb. 29.
The won rose for a second day as foreigners resumed buying local shares and as exporters were seen selling dollars to pay month-end bills. The Kospi index rose, snapping four days of losses. The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, halted a six-day winning streak on Monday after data showed U.S. personal spending barely increased in February.
“As we’re coming toward month-end, I expect exporters to sell dollars," said Irene Cheung, a foreign-exchange strategist at Australia & New Zealand Banking Group Ltd. in Singapore. “The won is going to be supported by that, coupled with the weakness in the dollar overnight."
The won climbed 0.2 percent to 1,163.80 a dollar, according to data compiled by Bloomberg. The currency has gained 6.3 percent in March in Asia’a best performance and is up 0.7 percent in 2016.