Won Falls to Four-Week Low as Exports Decline Amid Weak DemandJustina Lee
South Korea’s won fell to a four-week low on concern economic growth is slowing as currency gains threaten exports and U.S. and Chinese demand weakens.
Overseas sales declined 0.4 percent in January from a year earlier, compared with a revised 3.6 percent increase in December, a report released Sunday showed. That followed a Jan. 30 survey showing a drop in confidence among manufacturers. A factory gauge in China, Korea’s biggest export market, showed a contraction for the first time in two years last month, while U.S. economic growth trailed estimates last quarter.
The won declined 0.9 percent to close at 1,103.23 a dollar, according to prices compiled by Bloomberg. The currency touched 1,104.03 earlier, the weakest level since Jan. 6. It has rallied 1.5 percent since reaching a 15-month low of 1,120.20 on Dec. 8. The won gained 13 percent against the yen in 12 months and touched the strongest level in almost seven years against the Japanese currency in January.
“The won has weakened as end-of-month exporter demand wanes,” said Khoon Goh, a strategist at Australia & New Zealand Banking Group Ltd. in Singapore. “The focus has shifted to the weak business confidence reading and the impact that a strong won is having on exporter profits.”
The won-yen cross rate is important for Korean exports as the country’s automobile and electronics manufacturers compete against their Japanese counterparts in offshore markets.
South Korea’s current-account surplus narrowed to $7.2 billion in December, the least since April, data showed Monday.
Government bonds were little changed, with the yield on the notes due September 2024 at 2.25 percent, Korea Exchange prices show.