Won Snaps Two-Week Drop as Fed Rate Bets Recede on YellenMoonyoung Tae
South Korea’s won snapped a two-week decline after the Federal Reserve signaled an increase in U.S. interest rates is unlikely before mid-year.
Fed Chair Janet Yellen said in her congressional testimony this week that inflation and wage growth in the world’s largest economy remain too low to warrant raising key rates at the central bank’s next meeting, and its timetable is flexible. South Korean bonds and stocks rose this week on optimism global funds will delay pulling money from emerging markets until the Fed starts tightening monetary policy. The won gained as exporters sold dollars to meet their month-end cash needs.
The won advanced 0.4 percent from Feb. 17 to 1,098 a dollar as of the 3 p.m. close in Seoul Friday, according to data compiled by Bloomberg. The currency fell 0.1 percent today and 0.4 percent this month. Local markets were shut Feb. 18 to Feb. 20 for the Lunar New Year.
“Yellen’s remarks helped the won,” said Jeon Seung Ji, a Seoul-based currency analyst for Samsung Futures Inc. “Exporters selling dollars toward the month end also boosted the won.”
The yield on sovereign bonds maturing in December 2017 fell two basis points, or 0.02 percentage point, from Feb. 17 to 2.04 percent in Seoul, Korea Exchange prices show. The three-year yield fell one basis point on Friday and climbed six basis points in February.
South Korean manufacturers’ business confidence rose to 10-month high for March, the Bank of Korea reported Friday. The central bank on Feb. 17 unanimously held its key interest rate at 2 percent for a fourth month as policy makers expressed optimism for modest economic growth and inflation.