Won Strengthens as Stocks Rebound; Government Bonds AdvanceKyoungwha Kim
South Korea’s won rose, reversing an earlier decline, as local stocks rebounded following a sell-off in the morning. Government bonds advanced.
The Kospi index of shares gained 0.1 percent after falling as much as 1.2 percent earlier, after reports that China’s economic growth slowed in the fourth quarter and manufacturing in the New York region expanded less than projected in April. South Korea plans 19.3 trillion won ($17 billion) of additional fiscal support to spur growth, the Finance Ministry said today.
“With stocks rebounding, sentiment is turning around a bit,” said Cho Young Bok, a Seoul-based currency dealer at Daegu Bank. “The market is receiving some exporter dollar flows from heavy-industry companies.”
The won strengthened 0.5 percent to 1,115.14 per dollar in Seoul, according to data compiled by Bloomberg. It weakened as much as 0.4 percent earlier. The currency jumped 0.8 percent to 1,120.48 yesterday, the most since Feb. 4, after the U.S. said it had agreed to work with China, Japan and South Korea to try and draw North Korea back into nuclear talks.
One-month implied volatility in the won, a measure of expected moves in the exchange rate used to price options, rose one basis point, or 0.01 percentage point, to 8.69 percent.
China’s economy expanded 7.7 percent in the first quarter from a year earlier, compared with 7.9 percent in the preceding three months, official data showed yesterday. The Federal Reserve Bank of New York’s general economic index dropped to 3.1 this month from 9.2 in March. The median projection of 47 economists surveyed by Bloomberg was 7.
The yield on the 2.75 percent government bonds due March 2018 fell seven basis points to 2.68 percent, according to prices from Korea Exchange Inc.