Won Leads Asian Currencies Higher as Dollar Retreats Before Fed

  • Foreigners are net buyers of South Korean shares for 11th day
  • Rising consumer confidence positive for won: Maybank

South Korea’s won ended a three-day decline as a retreating dollar and higher oil prices boosted demand for emerging-market assets before monetary policy reviews in the U.S. and Japan.

The currency led gains in Asia as global funds bought local shares for the 11th day and a report showed consumer confidence in South Korea climbed for a second month in April. A gauge of the dollar dropped for a third day after U.S. durable goods orders rose less than forecast, signaling headwinds to growth before the Federal Reserve concludes its two-day meeting in Washington Wednesday. Oil also advanced, supporting developing-nation assets.

“The won is tracking the modest decline in the dollar and risk-supportive sentiment from overnight,” said Christopher Wong, a foreign-exchange strategist at Malayan Banking Bhd. in Singapore. “Consumer confidence this morning was slightly better than the prior reading too, so all this is shaping up constructively for gains in the won.”

The currency appreciated 0.2 percent to close at 1,148.29 per dollar in Seoul, after gaining as much as 0.7 percent earlier, data compiled by Bloomberg show. The won has strengthened 1.8 percent in the past month, the best performance in Asia after the Malaysian ringgit’s 3.1 percent gain.

Fed, BOJ

While futures are pricing in zero odds of the Fed hiking rates this week, investors will be watching for comments on the outlook for the U.S. economy and interest rates after the central bank earlier expressed concerns about global risks. The Bank of Japan is expected by analysts to boost its stimulus Thursday, a move that could weaken both the yen and the won as the two nations compete globally in trade.

South Korea’s 10-year government bond yield fell one basis point to 1.81 percent, while that on three-year notes was little changed at 1.46 percent, Korea Exchange prices show.

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