Korean Won Drops to This Month’s Low as Growth Trails EstimateSeyoon Kim
South Korea’s won fell to this month’s lowest level as data showed the nation’s economy grew less than analysts estimated and after North Korea threatened to conduct a nuclear test. Government bonds gained.
Gross domestic product increased 1.5 percent last quarter from a year earlier, the central bank reported today, compared with a 1.8 percent gain forecast by economists in a Bloomberg survey. The world economy will expand 3.5 percent in 2013, less than the 3.6 percent projected in October, the International Monetary Fund said yesterday. A planned “high-level” atomic test and long-range rocket launches will target the U.S., according to a statement from North Korea’s National Defense Commission carried by the official Korean Central News Agency.
“Concerns that economic recovery is still weak in Korea and globally drove stocks and the won lower,” said Jeon Seung Ji, analyst at Samsung Futures Inc. in Seoul. “While investors are cautious after the finance minister warned of the won’s gains, exporters may look for opportunities to sell dollars and that may limit further declines.”
The won fell 0.3 percent to 1,068.85 per dollar in Seoul, according to data compiled by Bloomberg. It touched 1,070.10 earlier, lowest since Dec. 28. One-month implied volatility in the won, a gauge of expected moves in exchange rates used to price options, rose five basis points, or 0.05 percentage point, to 5.95 percent. The won rose 8.3 percent in 2012, the region’s best currency performance.
Finance Minister Bahk Jae Wan vowed yesterday to curb currency volatility, saying recent gains were too steep. The government is “all ready” for new measures, Bahk told reporters in Seoul, declining to comment on when they will be announced. The currency touched 1,054.49 on Jan. 15, a level not seen since August 2011.
The yield on South Korea’s 2.75 percent bonds due September 2017 dropped one basis point to 2.82 percent, Korea Exchange prices show. The Kospi index of local shares declined 0.8 percent.