Won Climbs to Five-Month High as Weak Dollar Spurs Korea Inflowsby
Kospi gains as foreigners buy $311 million of shares in April
Won may underperform in Asia before BOK rate meeting: CBA
The won rose for a second day as a weak dollar boosted inflows to South Korean stocks.
The currency touched a five-month high and the Kospi index rose as foreigners boosted net purchases of local shares to $311 million in April. Emerging-market assets advanced as a gauge of the greenback hovered near the lowest level since June and Brent crude stayed above $42 a barrel. Commonwealth Bank of Australia expects the won to underperform its regional peers as investors assesses whether the the Bank of Korea will cut its benchmark rate on April 19.
The won gained 0.1 percent to close at 1,145.87 per dollar in Seoul, according to data compiled by Bloomberg. The currency touched 1,141.32, the strongest level since Nov. 6. It has weakened 0.2 percent this month and is up 2.3 percent in 2016.
“The chances are that the BOK could cut rates,” said Andy Ji, a strategist at CBA in Singapore. “But for now people are just happy trading on a softer U.S. dollar view, without really distinguishing different monetary policy paths.”
Only seven of 21 economists surveyed by Bloomberg expect the central bank to cut its policy rate by 25 basis points from a record low of 1.5 percent by the end of this quarter. The dollar has weakened as investors scaled back the amount and time frame for expected increases in U.S. interest rates amid dovish comments by Federal Reserve officials.
Government bonds were steady, with the yields on 10- and three year notes little changed at 1.80 percent and 1.47 percent, respectively, according to Korea exchange prices.