Korean Won Falls as Authorities Try to Curb VolatilitySeyoon Kim
South Korea’s won fell for the first time in a week as policy makers indicated they would take steps to curb the currency’s appreciation. Government bonds declined.
The won closed 0.1 percent weaker at 1,056.13 per dollar, according to data compiled by Bloomberg. It rallied 0.9 percent last week and reached 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 government may curb exchange-rate volatility further and recent movements in the won may have been too fast, Finance Minister Bahk Jae Wan said at a conference today in Hong Kong. Separately, Bank of Korea Governor Kim Choong Soo said today the nation will take an “active” response on the won if needed.
“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 Bank of Korea kept its seven-day repurchase rate at 2.75 percent on Jan. 11. The central bank’s Kim said today measures to slow the won’s gains could include “smoothing operations” and said authorities should act to normalize the foreign-currency market.
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. The nation sold 1.55 trillion won ($1.5 billion) of five-year government bonds at a yield of 2.88 percent at an auction today.