Won Snaps Two-Day Fall as Shipbuilders Win Contracts; Bonds DropYewon Kang
South Korea’s won snapped a two-day decline after shipbuilders won orders and before the Federal Reserve releases minutes of its July meeting that may offer clues on its stimulus-tapering plans. Government bonds fell.
Samsung Heavy Industries Co. received a 441.6 billion won ($395 million) order for two ships yesterday and Hyundai Mipo Dockyard Co. today said it got a 148.4 billion won contract for four vessels, according to regulatory filings. South Korea will act swiftly if financial-market volatility rises, the finance ministry said in a statement. The Federal Open Market Committee will publish the minutes today.
“News on shipbuilders’ overseas deals may support the currency while investors are in wait-and-see mode in general before the FOMC minutes release,” said Choi Sung Hyun, a currency trader at Woori Bank in Seoul.
The won rose 0.3 percent to 1,117.3 per dollar in Seoul, according to data compiled by Bloomberg. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, gained six basis points, or 0.06 percentage point, to 7.86 percent.
South Korea’s short-term external debt was $119.6 billion at the end of June, $2.6 billion lower than in the previous quarter, the Bank of Korea said in a statement today.
The nation’s current account surplus and lower ratio of short-term external debt to foreign reserves imply decreased external funding vulnerability, Kwon Young Sun, a Hong Kong-based economist at Nomura Holdings Inc., wrote in a research note today. Korea’s current-account surplus was $7.24 billion in June, according to central bank data, after a record $8.64 billion in May.
The yield on the 2.75 percent government bonds due June 2016 climbed three basis points to 2.97 percent, Korea Exchange Inc. prices show.