South Korea Won Snaps Six-Day Decline as Exporters Sell DollarsJiyeun Lee
South Korea’s won strengthened for the first time in seven days as local exporters sold dollars to take advantage of a favorable exchange rate.
The won posted the biggest five-day drop since March last week as Banco Espirito Santo SA, Portugal’s second-biggest bank by market value, roiled markets after a parent company missed payments on commercial paper. South Korea’s overseas shipments rose 2.5 percent in June from a year earlier, compared with a 1 percent drop in the previous month, while the trade surplus stayed near a one-year high of $5.3 billion.
The won appreciated 0.1 percent to 1,018.35 per dollar at the close in Seoul, after weakening 1 percent to 1018.92 last week, according to data compiled by Bloomberg. One-month implied volatility, a gauge of expected swings in the exchange rate used to price options, increased 17 basis points, or 0.17 percentage point, to 5.05 percent.
“Exporters were seen selling dollars today as the won traded near 1,020,” said Ryoo Hyun Jung, the Seoul-based chief currency dealer at Citibank Korea Inc. Portugal’s debt issues weakened the won last week, but this trend is unlikely to continue, according to Ryoo.
Finance Minister nominee Choi Kyung Hwan plans to announce measures to boost household income this month, Yonhap News reported yesterday, citing a government official it didn’t name. He is considering levying taxes on companies’ excess internal reserves that would be paid to employees as wages or dividends, the report said.
Overseas investors sold more of South Korea’s equities than they bought for the first time in three days, exchange data show.
The yield on the 3.125 percent government bonds due March 2019 was little changed at 2.78 percent, Korea Exchange Inc. prices show. The benchmark 10-year yield was steady at 3.07 percent while the three-year rate increased one basis point to 2.60 percent.