Korean Won Retreats From 17-Month High on Suspected Intervention
South Korea’s won was little changed after retreating from a 17-month high on speculation authorities stepped in to slow the currency’s appreciation.
The won was at 1,063.45 per dollar as of 10:13 a.m. in Seoul compared with 1063.68 on Jan. 4, according to data compiled by Bloomberg. It touched 1,060.50 earlier, the strongest level since Aug. 4, 2011, after U.S. jobs data showed employers in the world’s largest economy added workers in December even as Congress battled over the budget. The jobless rate held at 7.8 percent, Labor Department figures showed Jan. 4, matching an almost four-year low.
“Speculation is that authorities took action to slow the won’s gains,” said Cho Young Bok, Seoul-based currency dealer at Daegu Bank. “It seems the authorities want to sustain the currency above 1,060 to the dollar.”
Finance Minister Bahk Jae Wan said last week he was concerned about herd behavior in the foreign-exchange market and the government was actively considering measures to curb volatility in the won, which was Asia’s best-performing currency of 2012, with an 8.3 percent advance versus the dollar.
South Korean President-Elect Park Geun Hye’s new administration probably won’t continue policies to keep the currency “artificially weak,” the Seoul Economic Daily reported today, citing an unidentified official in Park’s transition committee.
Employers in the U.S. added 155,000 workers last month after 161,000 in November, Labor Department figures showed Jan. 4. The Standard & Poor’s 500 Index closed Jan. 4 at the highest level since December 2007.
“Improvement in the U.S. jobs data and a rise in the U.S. stock market are pushing up the Korean won,” Hong Seok Chan, an analyst at Daishin Economic Research Institute in Seoul, said before the suspected intervention. “Still, anticipation that South Korean authorities may try to stem the won’s gain is preventing the currency from rising further.”
The yield on South Korea’s 2.75 percent bonds due 2015 rose one basis point, or 0.01 percentage point, to 2.75 percent, according to Korea Exchange prices.
Policy makers at the Bank of Korea meet on Jan. 11 to review borrowing costs. The central bank kept the benchmark seven-day repurchase rate at 2.75 percent last month, after cuts of 25 basis points at reviews in July and October.
To contact the reporter on this story: Seyoon Kim in Seoul at firstname.lastname@example.org