Won Rises to 10-Week High as Emerging-Market Rally ContinuesJustina Lee
South Korean currency is best performer in Asia this month
Weak local economic growth may limit gains, BBH's Murata says
South Korea’s won climbed to a 10-week high as rising stocks and recovering oil prices drove demand for emerging-market assets.
Asian shares tracked gains in the U.S. to rally for a third day after the European Central Bank unveiled a more aggressive dose of monetary stimulus than what many analysts had anticipated, but said further rate cuts may not be needed. The won is the best-performing Asian currency so far this month as foreign funds have pumped a net $2 billion into local equities and debt amid rising commodity prices and less concern over global growth.
The won strengthened 0.6 percent to close at 1,186.07 a dollar, according to data compiled by Bloomberg. The currency reached 1,183.55 earlier, the strongest since Jan. 4, and has rallied 4.3 percent this month. It broke its 100-day moving average, a bullish signal to investors looking at technical indicators.
"Risk-off sentiment continues to be damped, which leads to a steady won," said Masashi Murata, a vice president at Brown Brothers Harriman & Co. in Tokyo. The won’s advance may be limited as local growth continues to be weak and China is still slowing, he said.
The Bank of Korea will probably cut this year’s growth forecast to 2 percent in April, compared with the 3 percent projection announced in January, MoneyToday reported Monday without attribution. Chinese exports shrank more than expected in February, stoking concern expansion in South Korea’s largest overseas market has yet to recover.
Sovereign bonds rose, pushing the three-year yield down one basis point to 1.54 percent, Korea Exchange prices show. The 10-year yield was little changed at 1.92 percent.