Won Closes Near Two-Year High on Export Outlook; Bonds AdvanceYewon Kang
The won closed 0.6 percent off a two-year high as South Korea’s current-account surplus widened and its export outlook improved. Government bonds rose.
The excess in the broadest measure of trade expanded to $6.57 billion in September from a revised $5.68 billion in August, official data showed. Asia’s fourth-largest economy will likely post record exports in October, Trade Minister Yoon Sang Jick said today before figures due Nov. 1. Global funds bought more local equities than they sold for a record 43rd day, exchange data show, as the Federal Open Market Committee starts a two-day meeting to consider whether to taper its stimulus.
“The current account surplus supports the won,” said Jude Noh, chief currency trader at Suhyup Bank in Seoul. “Investors are in a wait-and-see mode before the FOMC meeting, although it’s likely the Fed will keep its previous policy stance.”
The won closed at 1,060.62 per dollar in Seoul, compared with 1,061 yesterday, according to data compiled by Bloomberg. The currency touched 1,054.35 on Oct. 24, the strongest level since August 2011. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, fell 11 basis points, or 0.11 percentage point, to 5.85 percent.
South Korea will achieve a $63 billion current-account surplus this year, Bank of Korea Director General Jung Yung Taek said at a briefing in Seoul today. Exports in October were “very good,” driven by sales of phones and auto parts, he said.
The won may appreciate further next year because of improved exports and a current-account surplus, Wai Ho Leong, a Singapore-based economist at Barclays Bank Plc., said in an e-mail response today.
The yield on the government’s 2.75 percent sovereign bonds due June 2016 dropped one basis point to 2.81 percent, according to Korea Exchange Inc. prices.