Won Rises Most in Two Weeks on Demand for Shares; Bonds Gain

The won rose the most in two weeks as global funds bought South Korean shares after an unexpected increase in U.S. retail sales bolstered investor appetite for emerging-market assets. Government bonds rose.

The currency rebounded after a 2.3 percent decline over the last three days, the longest run of losses since April 8. Sales at U.S. retailers advanced 0.1 percent in April following a 0.5 percent drop in March, official figures showed yesterday in Washington, prompting speculation the Federal Reserve may end its monthly purchases of $85 billion of Treasury and mortgage debt. Foreign funds bought more South Korean shares than they sold, halting two days of net sales, stock exchange data show.

“The improved U.S. retail sales data showed signs of an economic recovery,” said Son Eun Jeong, an analyst at Woori Futures Co. in Seoul. “Speculation that the Fed’s quantitative easing program will end is rising and may slow the won’s rise.”

The currency rose 0.5 percent to 1,106.44 per dollar in Seoul, the biggest advance since April 30, according to data compiled by Bloomberg. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, fell 36 basis points, or 0.36 percentage point, to 8.26 percent, the data show.

The yield on South Korea’s 2.75 percent government bonds due March 2018 fell two basis points to 2.64 percent, according to prices from Korea Exchange Inc.

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