Won Posts Weekly Advance as Risk Appetite Revives After Paris

  • BOK Governor Lee says Korea economy can absorb external shocks
  • Finance Minister sees consumption driving 3% growth in 2016

South Korea’s won posted its first weekly gain in almost a month as speculation that U.S. interest rates will only rise gradually revived demand for emerging-market assets after a setback following terror attacks in Paris.

Asia’s fourth-largest economy is sound enough to absorb external shocks, Bank of Korea Governor Lee Ju Yeol said at a meeting in Seoul Friday, echoing Finance Minister Choi Kyung Hwan’s remarks a day earlier that the impact of last week’s shootings and blasts in the French capital will be temporary. The won and South Korean stocks rose after minutes of the Federal Reserve’s October meeting reaffirmed policy makers will consider raising rates in December and that increases will be modest.

The won strengthened 0.8 percent from Nov. 13 and 0.6 percent on Friday to close at 1,154.31 a dollar in Seoul, data compiled by Bloomberg show. It rebounded from a one-month low reached Wednesday. The currency’s 2.7 percent advance this quarter has helped pare its decline in 2015 to 4.8 percent. The Kospi index of shares advanced 0.8 percent this week and government bonds rose.

"Investors took advantage of the dollar’s strength earlier this week amid expectations of gradual U.S. rate increases," said Jeon Seung Ji, a currency analyst at Samsung Futures Inc. in Seoul, who expects the won to trade between 1,145 and 1,170 versus the greenback next week. "Risk-averse sentiment after Paris attacks subsided and had a limited impact on Korean financial markets."

Overseas investors sold more South Korean shares than they bought this week, taking net sales for the month to $660 million, exchange data show.

South Korea’s economy will be able to expand 3 percent next year if the current recovery led by private consumption continues, Finance Minister Choi said in a meeting with heads of think tanks in Seoul on Friday. Growth picked up to 2.6 percent in the third quarter from the slowest in more than two years in the preceding three months. Choi cited U.S. rate increases, a slowing Chinese economy, instability in commodity-producing countries and terrorist attacks as risks to growth.

The yield on 10-year government bonds fell eight basis points this week and one basis point Friday to 2.26 percent, Korea Exchange prices show. The nation’s local-currency sovereign debt has returned 4.8 percent this year, a Bloomberg index shows.

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