Won Advances to Three-Week High as Exporters Convert Earningsby
Volumes very low as some banks have closed books: Busan Bank
IMF official says Korea growth potential may dip due to aging
South Korea’s won strengthened to a three-week high on speculation exporters are selling dollars to convert overseas earnings as the end of the year approaches.
The currency climbed 0.2 percent from Dec. 24 to close at 1,165.34 a dollar in Seoul, data compiled by Bloomberg show. It rose to 1,162.40 earlier, the strongest since Dec. 4. Local financial markets were shut on Friday for Christmas.
“Exporters are selling the greenback to repatriate earnings as both the year-end and month-end approach," said Kim Dae Hun, a currency trader at Busan Bank Co. in Seoul. “But the amounts aren’t huge and trading volume is very low. Some banks have closed their books and we don’t see many dollar bids from offshore investors."
The growth potential of Asia’s fourth-largest economy may dip to 0.5 percent in 10 to 20 years due to an aging population, Rhee Chang Yong, director of the International Monetary Fund’s Asia and Pacific Department, said in an interview with Yonhap News on Sunday. Cutting interest rates and extra budgets aren’t enough and efforts to encourage childbirth are needed, said Rhee.
The potential growth rate will fall to between 3 percent and 3.2 percent during 2015 and 2018, from a range of 3.2 percent to 3.4 percent in the 2011-2014 period, the Bank of Korea projected on Dec. 18. It expects gross domestic product to expand 3.2 percent next year.
South Korea must raise economic growth to the 3 percent level in 2016 and needs measures to prevent consumer spending from falling as the effects of an extra fiscal budget fade and consumption tax cut end this year, President Park Geun Hye said in Seoul on Monday.
Government bonds fell, with the three-year yield rising two basis points to 1.68 percent, Korea Exchange prices show. The 10-year yield was little changed at 2.09 percent.