Korea Won Posts Weekly Gain on Exporter Demand, Stock InflowsJiyeun Lee
South Korea’s won posted the first weekly advance in three as exporters repatriated overseas earnings to settle month-end bills and global funds boosted holdings of the nation’s equities.
The Kospi index of shares closed at the highest level in eight months as foreign investors bought $560.5 million more local stocks than they sold this week, exchange data show. The won weakened yesterday as the central bank reported South Korea’s economy grew 0.6 percent in the second quarter from the previous period, the slowest pace in more than a year. The government said yesterday that the current-account surplus will reach 5 percent of gross domestic product this year.
“Exporters were selling dollars near the month end, and the trend is likely to extend into next week as companies seek to convert overseas earnings before summer holidays start in August,” said Ryoo Hyun Jung, the Seoul-based chief currency dealer at Citibank Korea Inc.
The won rose 0.3 percent this week and today to 1,026.15 per dollar at the close in Seoul, data compiled by Bloomberg show. It reached 1,032.73 earlier, the weakest since July 18. One-month implied volatility, a gauge of expected swings in the exchange rate used to price options, fell 31 basis points since July 18 and rose five basis points today to 5.75 percent.
The finance ministry lowered its 2014 growth projection to 3.7 percent from 3.9 percent yesterday and pledged an expansionary fiscal policy. An index of consumer confidence fell to 105 in July from 107 in June, official figures showed today.
The yield on sovereign bonds due June 2017 was little changed today and fell two basis points for the week to 2.50 percent, exchange data show. The yield on debt maturing March 2024 was steady today and rose three basis points from July 18 to 3.01 percent.