Korean Won Rises on Record Current-Account Surplus; Bonds GainYewon Kang
The won gained for a third day after South Korea’s current-account surplus widened to a record in May and the government raised its economic growth forecast. Government bonds advanced.
The surplus in the widest measure of trade increased to $8.64 billion in May, more than doubling from $3.93 billion in April, the Bank of Korea reported today. The Finance Ministry revised its 2013 growth estimate to 2.7 percent from 2.3 percent and global funds bought more of the nation’s stocks than sold today, ending a 14-day run of net sales in which $5.1 billion was pulled from the market.
The won advanced 0.4 percent to close at 1,149.76 per dollar in Seoul, according to data compiled by Bloomberg. One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, fell 22 basis points, or 0.22 percentage point, to a one-week low of 11.70 percent.
“The record current-surplus was the dominant factor that supported the won today,” said Jude Noh, a Seoul-based chief currency trader at Suhyup Bank. Foreigners stopped dumping local stocks and the government’s “upbeat report” also helped, he said.
Asia’s fourth-largest economy is likely to post a “substantial” current-account surplus in June, though the size may be smaller than in May, according to Kim Young Bae, director general at the central bank. The Finance Ministry predicted a surplus for this year of $38 billion, up from a previous estimate of $29 billion, and said it expects economic growth to quicken to 4 percent next year.
The yield on the 2.75 percent bonds due June 2016 fell three basis points to 2.95 percent, declining for a third day, prices from Korea Exchange Inc. show.
Bonds have rebounded this week from a four-day slide through June 24 after the government said it may scale back sales of the securities next month. The Finance Ministry is due to release its bond-sale plan for July at 5 p.m. local time today.