Won Declines With Korean Stocks as Oil Plunge Curbs Risk Takingby
Central bank's less dovish stance supports won: BBH analyst
BOK seen to refrain from cutting policy rate Tuesday: survey
South Korea’s won weakened after the failure of talks to limit oil output spurred a plunge in crude, curbing demand for emerging-market assets.
The Kospi index of local shares fell the most in almost two weeks as a meeting between the world’s biggest producers ended in Doha on Sunday without any agreement. The Bank of Korea will refrain from following India and Indonesia in easing monetary policy further on Tuesday, and keep its benchmark interest rate at a record-low 1.5 percent for the 10th straight month, according to 17 of 20 economists surveyed by Bloomberg. The rest see a 25 basis point cut.
The won slipped 0.4 percent to close at 1,150.38 a dollar in Seoul, taking its monthly loss to 0.6 percent, according to data compiled by Bloomberg. The Kospi dropped 0.3 percent, the most since April 5, while Japan’s Topix slumped 3 percent.
“The markets are cautious because of the drop in oil price and Japanese equities,” said Masashi Murata, a vice president at Brown Brothers Harriman & Co. in Tokyo. “The less dovish stance of the BOK supports the won.”
The central bank is “cautiously managing monetary policy” due to a volatile economic situation, Governor Lee Ju Yeol was cited as saying on Friday in Washington on the sidelines of the Group of 20 Finance Ministers and Central Bank Governors meeting, according to a Yonhap News report. Lee had indicated after the BOK’s March meeting that further rate cuts might have limited benefit.
Government bonds were little changed, with the 10- and three-year yields at 1.84 percent and 1.50 percent, respectively, according to Korea exchange prices.