Won Ends Six-Day Drop on Weak Dollar as ECB Stimulus Falls ShortJustina Lee
European Central Bank refrains from boosting bond purchases
Korean 10-year bond yield increases most in four weeks
South Korea’s won snapped a six-day losing streak after the dollar plunged as the European Central Bank’s stimulus announcement fell short of what some investors had anticipated.
A gauge of the greenback against 10 peers fell the most since March on Thursday after the ECB cut its deposit rate by less than expected and refrained from enlarging its bond-purchase program. U.S. service industries expanded at the slowest pace in six months in November, supporting the case for a more gradual path of monetary tightening, a report showed overnight. The odds of a Federal Reserve rate rise this month are 76 percent as Chair Janet Yellen pointed to solid household spending as evidence of economic strength.
The won advanced 0.7 percent to 1,156.53 a dollar in Seoul, data compiled by Bloomberg show. The currency dropped 1.8 percent in a six-day declining streak through Thursday and is down 0.3 percent this week.
"Most Asian currencies are rising against the dollar on weak U.S. ISM non-manufacturing data and ECB action," said Masashi Murata, vice president at Brown Brothers Harriman & Co. in Tokyo. The won will probably resume dropping as a Fed rate increase will boost the dollar, he said.
South Korea’s economy expanded 2.7 percent in the third quarter from a year earlier, the quickest pace this year, figures showed this week. Exports fell less than forecast last month.
Government bonds declined following a selloff in European and U.S. debt on the ECB announcement. The yield on the 10-year securities rose five basis points, the most in four weeks, to 2.32 percent, Korea Exchange prices show. The five-year yield climbed three basis points to a three-month high of 2.02 percent.