Won Rises to Highest Since 2008 on Wider Current-Account Surplus
The won rose to the strongest level since 2008 after South Korea said its current-account surplus widened last month and before data forecast to show export growth accelerated in April.
The excess in the broadest measure of trade increased to $7.35 billion in March from a revised $4.5 billion in February, the central bank reported today. Overseas shipments gained 5.5 percent this month from a year earlier, after rising 5.1 percent in March, according to a Bloomberg survey of analysts before data due May 1. Speculation exporters will repatriate earnings at the month-end before local financial markets shut for holidays on May 1, 5 and 6 also supported the won.
The South Korean currency appreciated 0.3 percent to 1,032.70 per dollar as of 10:06 a.m. in Seoul, data compiled by Bloomberg show. The currency touched 1,031.39 earlier, the strongest since August 2008. One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, dropped eight basis points, or 0.08 percentage point, to 6.52 percent.
“With the current-account surplus and exporters selling dollars at the end of the month, there’s no reason to bet for a stronger dollar,” said Baik Jin Kyu, a Seoul-based currency trader at Nonghyup Bank.
The level at which South Korean authorities are expected to intervene in the currency market will likely be lowered to 1,000 won per dollar as exports improve and foreigners continue to buy won-denominated assets, Jeong Mi Young and Jeon Seung Ji, Seoul-based analysts at Samsung Futures Inc. wrote in at report today.
Overseas investors have bought $3.1 billion more South Korean equities than they sold this month, exchange data show.
Government bonds were little changed. The yield on the nation’s 3.125 percent government bonds due March 2019 was 3.17 percent, according to Korea Exchange data.
To contact the reporter on this story: Jiyeun Lee in Seoul at firstname.lastname@example.org