Won Weakens on Speculation Gains May Be Curbed; Bonds Decline
South Korea’s won fell for the first time in a week on speculation authorities may take steps to slow the currency’s appreciation after it reached a 17-month high last week. Government bonds declined.
The won fell 0.1 percent to 1,055.80 per dollar as of 10:21 a.m. in Seoul, according to data compiled by Bloomberg. It rallied 0.9 percent last week and closed at 1,054.69 on Jan. 11, the strongest level since Aug. 2, 2011. The won advanced 8.3 percent in 2012, the best performance among the 11-most traded Asian currencies.
The Bank of Korea kept its seven-day repurchase rate at 2.75 percent on Jan. 11, with Governor Kim Choong Soo saying that day the central bank’s role is to control volatility in the currency through “smoothing” operations. Finance Minister Bahk Jae Wan said on Jan. 2 that he’s concerned about herd behavior in the currency market and may introduce measures to curb the won’s volatility.
“Concern that authorities may take action to stem the won’s gains are keeping the won weaker,” said Jeon Seung Ji, a currency analyst at Samsung Futures Inc. in Seoul. “Still, some investors bet the won will rise after the central bank left rates unchanged.”
The yield on South Korea’s 2.75 percent bonds due September 2017 rose one basis point, or 0.01 percentage point, to 2.88 percent, according to Korea Exchange prices.
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