Won Falls Most in Two Weeks as U.S. Data Raise Fed Taper Concern

South Korea’s won fell the most in two weeks as improving data in the U.S. fueled bets the Federal Reserve will step up the pace of its stimulus cuts.

U.S. housing starts slowed less than forecast and industrial output rose for a fifth straight month in December, reports showed Jan. 17. Federal Reserve Bank of Richmond President Jeffrey Lacker said the same day that the monetary authority, which will cut its bond purchases to $75 million this month, may consider more reductions at following meetings. South Korean producer prices fell 0.4 percent in December, the 15th decline in as many months, central bank figures showed today.

The won fell 0.4 percent to 1,063.60 per dollar at the close in Seoul, the biggest loss since Jan. 6, according to data compiled by Bloomberg. The currency earlier weakened as much as 0.6 percent to 1,065.57. One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, rose nine basis points to 6.23 percent.

“There has been a strong dollar trend recently supported by positive data in the U.S.,” said Kim Dong Young, a Seoul-based currency trader at Industrial Bank of Korea. “And there weren’t enough Korean exporters selling the greenback today to curb losses in the won.”

The yield on the 3 percent notes due December 2016 rose one basis point, or 0.01 percentage point, to 2.90 percent, according to Korea Exchange Inc. prices.

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