Korean Won at Two-Week High as Fed Rate Move Removes Uncertaintyby
Saudi Arabia seen as among top sellers of Korea shares
Trading light ahead of long weekend holiday, Busan Bank says
South Korea’s won closed at a two-week high and stocks extended gains on optimism global investors will return to the nation’s shares now that the uncertainty over a U.S. interest-rate increase has been removed.
The currency rose as much as 0.3 percent before ending little changed and equities advanced for a third day in what was generally a “thin market” ahead of the year-end holidays, according to Busan Bank Co. Sentiment also improved as oil prices climbed from an 11-year low. As the price of the commodity slumped, investors in Saudi Arabia were among the three-biggest sellers of South Korean shares in November, October and September, according to data from the Financial Supervisory Service.
"Foreigners’ net shares sales dwindled after the Federal Reserve uncertainty cleared and as oil prices halted a drop," said Kim Dae Hun, a currency trader at Busan Bank in Seoul. "Bets for a strong dollar are scarce at the moment, and local exporters’ dollar selling is bigger than usual as it’s year-end."
The won was at 1,173.20 a dollar in Seoul and earlier appreciated to 1,169.70, the highest since Dec. 7, data compiled by Bloomberg show. The currency has dropped 1.3 percent this month as overseas investors withdrew a net $2.5 billion from local stocks.
The Kospi share index gained 0.3 percent and is up 1.2 percent this week ahead of a long weekend, with local markets closed on Friday. The three-year government bond yield was steady on Wednesday at 1.67 percent and the 10-year yield fell one basis point to 2.11 percent.
The Bank of Korea’s new inflation target of 2 percent for 2016 to 2018 isn’t a short-term goal but a mid-term aim, Governor Lee Ju Yeol said in a meeting with economists in Seoul on Wednesday. Some analysts who are projecting an interest-rate cut next year are using “different interpretations” of the price data, he said.
The central bank has lowered its inflation prediction for the next two years from a range of 2.5 percent to 3.5 percent. Consumer prices rose 1 percent in November from a year earlier.