Korean Won Drops Most in Two Weeks as U.S. Data Bolsters DollarJiyeun Lee and Kyung Jin Kim
South Korea’s won fell the most in almost two weeks as optimism the world’s biggest economy is improving supported the U.S. currency.
The Bloomberg Dollar Index, which tracks the greenback against 10 major counterparts, climbed 0.1 percent to 1,008.02 after gaining 0.2 percent last week. Official reports released July 3 showed U.S. companies added more jobs in June than forecast while unemployment fell. The Bank of Korea will hold its benchmark rate at 2.5 percent on July 10, unchanged since a cut in May 2013, according to all 14 economists surveyed by Bloomberg News.
The won weakened 0.2 percent to 1,010.57 per dollar at the close in Seoul, according to data compiled by Bloomberg. It touched 1,008.37 on July 4, the strongest level since 2008. One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, dropped five basis points, or 0.05 percentage point, to 4.65 percent.
“It seems the won is taking a breather from the recent rally and reflecting the strong dollar trend,” said Kim Dong Wook, a Seoul-based currency trader for Kookmin Bank. “The dollar-won exchange rate will be supported near 1,008.50 for the short term.”
Some importers were seen buying dollars to settle import bills, according to Park Daebong, a Seoul-based currency trader for Nonghyup Bank.
South Korea’s Finance Minister nominee Choi Kyung Hwan testifies before lawmakers tomorrow. Choi said in an e-mailed response to lawmakers reviewed by Bloomberg News today that an extra budget is not being considered at the moment even though the pace of economic recovery is slowing
The yield on South Korea’s 2.75 percent bonds due June 2017 rose one basis point to 2.62 percent, Korea Exchange Inc. prices show. The 10-year yield climbed one basis point to 3.13 percent.