Korean Won Gains to One-Month High as Fed Seen Keeping Rates Low

South Korea’s won rose to a one-month high on optimism the Federal Reserve will keep U.S. interest rates low for an extended period, bolstering demand for emerging-market assets.

The Bloomberg Dollar Spot Index fell the most in a week yesterday after U.S. home sales and manufacturing data missed estimates. The won was also supported today by speculation exporters are offloading dollars to pay month-end bills, said Jeon Seung Ji, a currency analyst at Samsung Futures Inc.

“The dollar declined yesterday and the Fed might stay dovish,” Seoul-based Jeon said. “Usually at month end, exporters sell their dollars.”

The won rose 0.3 percent to 1,049.58 against the greenback in Seoul, according to prices compiled by Bloomberg. It touched 1,049.51 earlier, the strongest level since Sept. 29. One-month implied volatility, a gauge of expected swings used to price options, fell 16 basis points, or 0.16 percentage point, to 7.3 percent.

Fed officials start a two-day meeting later today. They will probably bring an end to the central bank’s bond-buying program, while keeping the benchmark interest rate near zero, according to the median forecast of economists surveyed by Bloomberg.

The yield on South Korea’s sovereign notes due June 2017 was unchanged at 2.22 percent, Korea Exchange prices show. The 10-year yield was steady at 2.72 percent.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE