Won Rises to 3-Month High as Trade Surplus Widens; Bonds Decline

The won climbed to the highest level in more than three months after South Korea reported a trade surplus that was double what economists predicted, boosting the growth outlook. Government bonds declined.

Exports exceeded imports by $4.92 billion in August, the Trade Ministry said yesterday, compared with the median forecast of $2.3 billion in a Bloomberg survey of 10 economists. South Korean shipbuilders reported orders for container vessels last week. Foreign investors bought $1.9 billion more local stocks than they sold in August, the biggest monthly net purchase since December, exchange data show.

“The better-than-forecast trade surplus and the news of shipbuilding contracts are lifting the sentiment on the won,” said Jeon Seung Ji, a currency analyst at Samsung Futures Inc. in Seoul. “It remains to be seen whether the trend of foreign investors buying stocks will continue this month.”

The won advanced 0.9 percent, the most since Aug. 5, to 1,100.59 per dollar in Seoul, according to data compiled by Bloomberg. The currency touched 1,100.53, the strongest level since May 10. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, was little changed at 7.96 percent.

Exports rose 7.7 percent in August from a year ago and imports gained 0.8 percent, official data showed yesterday. South Korea’s economy is expected to grow 2.8 percent this year and second-half exports will probably increase 5 percent from a year ago on shipbuilding, MoneyToday reported yesterday, citing an interview with Vice Trade Minister Kim Jae Hong. The Bank of Korea forecast in July Asia’s fourth-largest economy will expand 2.8 percent this year and 4 percent in 2014.

Exporters Orders

Samsung Heavy Industries Co. won contracts for a total 1.06 trillion won ($963 million) of two overseas deals and Samsung Engineering Co. got 398.9 billion won order, the companies’ regulatory filings said today. Hyundai Heavy Industries Co. and Daewoo Shipbuilding & Marine Engineering Co. won contracts valued at 2 trillion won for container ships, according to regulatory filings last week.

The yield on South Korea’s 2.75 percent bonds due June 2016 climbed three basis points, or 0.03 percentage point, to 2.91 percent, Korea Exchange Inc. prices show. South Korea sold 1.85 trillion won of three-year government notes at yield of 2.92 percent and 700 billion of 30-year securities at 3.89 percent today.

BlackRock Inc. holds less South Korean assets than the weighting in its benchmark on concern over a central bank battle to curb household debt and a reduction in U.S. monetary stimulus, according to Joel Kim, Singapore-based head of Asia-pacific fixed income at the world’s biggest money manager.