Korean Won Reverses Drop on Speculation Exporters Sold DollarsJiyeun Lee
South Korea’s won rose, reversing an earlier decline, on speculation exporters sold dollars to convert overseas earnings before the Chuseok holidays.
The currency closed 0.1 percent stronger at 1,013.15 per dollar in Seoul, after falling as much as 0.2 percent, according to data compiled by Bloomberg. Spot trading volume was $5.7 billion, compared with a daily average of $7.2 billion over the past year, figures from the Korea Money Brokerage Corporation and Seoul Money Brokerage Services show. U.S. financial markets are closed for the Labor Day holiday today and South Korean markets will be shut Sept. 8-10.
“Trading volume was low with the U.S. markets closed,” said Lee Hyun Kyung, a Seoul-based currency trader at Busan Bank. “So just a small amount of dollar selling by local exporters moved the exchange rate.”
South Korean exports fell 0.1 percent in August from a year earlier, compared with the 0.8 percent drop forecast in a Bloomberg survey, official data showed today. The trade surplus was $3.4 billion, more than the $2.9 billion median estimate. The won declined earlier after the Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, rose on Aug. 29 following the release of a private gauge showing U.S. consumer confidence increased in August.
The U.S. Thomson Reuters/University of Michigan final sentiment index advanced to 82.5 for August, more than the median projection of 80 in a Bloomberg survey of economists. The data bolstered speculation the Federal Reserve is moving closer to raising interest rates.
One-month implied volatility in the won, a gauge of expected swings in the exchange rate used to price options, climbed 11 basis points, or 0.11 percentage point, to 5.82 percent. Government bonds were little changed, with the yield on the 3.5 percent notes due March 2024 at 3.04 percent, Korea Exchange Inc. prices show.