Won Climbs Toward Four-Month High as BOK Seen Tolerating Gains

  • Euro and yen strength create room for won to rise: ABN Amro
  • Ten-year sovereign bonds advance for first time in three days

The won climbed toward a four-month high on speculation the Bank of Korea will allow gains as the yen and euro appreciate.

The Japanese currency is near a 17-month high against the dollar and the euro is close to the strongest level since October after Federal Reserve Chair Janet Yellen said last week the U.S. central bank should “proceed cautiously" in raising interest rates. South Korean auto and electronics companies compete in international markets with German and Japanese counterparts, and exchange-rate disparities can affect competitiveness.

The won advanced 0.7 percent to 1,146.13 a dollar in Seoul, according to data compiled by Bloomberg. It rose to 1,142.95 on Friday, the strongest level since Nov. 26, and appreciated 8.2 percent in March in the best performance in Asia. The Bloomberg Dollar Spot Index, which tracks the greenback against 10 peers, advanced 0.1 percent on Monday after losing 1.6 percent last week, the most since early February.

“You have some dollar weakness and euro and yen strength, which is positive for the won," said Roy Teo, a senior currency strategist at ABN Amro Bank NV in Singapore. “If the Korean currency were to strengthen in line with the euro and the Japanese yen, then the Bank of Korea is likely to be more tolerant of a strengthening won."

Exports fell less than expected in March, while inflation came in slower than forecasts, according to data released on Friday. It’s too early to say if the nation is at the start of a recovery trend, Yonhap News reported Monday, citing Vice Finance Minister Choi Sang Mok.

Ten-year government bonds rose for the first time in three days, pushing the yield down two basis points to 1.77 percent, Korea Exchange prices show. Three-year notes were little changed, with the yield at 1.44 percent.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE