Korean Won Snaps Seven-Day Rally as Foreign Funds Offload Stocksby
Kospi index down most in three weeks as Asian bourses drop
Central bank may become more dovish: Mizuho Bank economist
South Korea’s won halted a seven-day rally as foreign funds pulled money from the nation’s shares for the first time in two weeks.
The Kospi index fell the most in more than three weeks as Japan led a retreat in Asian equities. An export slump in China, South Korea’s biggest overseas market, deepened in February as shipments declined the most since May 2009, an official report showed Tuesday. Eleven of 18 economists surveyed by Bloomberg expect the Bank of Korea to leave its policy rate at 1.5 percent on Thursday, with the rest projecting a cut to 1.25 percent.
“There’s concern that monetary policy will actually be something more dovish," said Vishnu Varathan, a Singapore-based economist at Mizuho Bank Ltd. “There’s still an overarching concern that the more export-focused economies in the region will continue to feel some of the headwinds."
The won weakened 0.4 percent to 1,206.70 a dollar in Seoul, according to data compiled by Bloomberg. The currency strengthened 3.1 percent in the seven days through Monday, the longest winning run since December 2013. It’s still the worst performer among Asian emerging markets this year, declining 2.8 percent. The Kospi index fell 0.6 percent, the most since Feb. 12.
Market instability in China, Japan and oil-producing nations is hurting exports and the government will take steps to boost jobs for youth and women, South Korean Finance Minister Yoo Il Ho said Monday. A slowdown in global trade is making it harder for Chinese leaders, who are gathered in Beijing this week to set the nation’s economic plans, to keep growth at the targeted 6.5 percent to 7 percent range. China’s stocks fell for the first time in six days.
Three-year government bonds rose, pushing the yield down two basis points to 1.49 percent, Korea Exchange prices show. The 10-year yield dropped three basis points to 1.85 percent.