Won Declines Most Since October as Yen Weakens After China DataMoonyoung Tae
South Korea’s won fell the most since October, tracking a decline in the yen after better-than-expected Chinese economic data damped demand for safe-haven assets.
China reported 7.4 percent growth for last year versus projections for 7.3 percent. South Korea’s currency tends to move in tandem with Japan’s as the countries compete for exports in international markets. The dollar advanced against most peers as the Bank of Japan began a two-day policy meeting and speculation mounted that the European Central Bank will expand asset purchases this week.
The won closed 1 percent weaker at 1,088.33 a dollar in Seoul, prices compiled by Bloomberg show. That compares with a two-month high of 1,072.15 reached last week. The yen dropped 0.7 percent versus the greenback and the Bloomberg Dollar Spot Index rose 0.3 percent.
“The market expected the won to go up after Chinese growth exceeded forecasts, but it was dragged down by the dollar’s strength against the yen,” said Paik Jin Kyu, a Seoul-based currency trader at Nonghyup Bank. “There was dollar buying by local importers as well.”
South Korea will keep monitoring financial markets and adjust controls on capital flows to preemptively guard against the risk of funds being pulled from the nation’s assets, Finance Minister Choi Kyung Hwan said at a policy meeting in Seoul today.
Government bonds rose, with the 10-year yield dropping two basis points, or 0.02 percentage point, to 2.36 percent, Korea Exchange prices show. The yields on five- and three-year notes fell one basis point each to 2.12 percent and 2.03 percent, respectively.