Won Reverses Gain as Korean Importers Buy Dollars; Bonds Riseby
Korea's currency closes lower; had rallied for five weeks
Receding bets for U.S. rate increases weigh on greenback
South Korea’s won retreated on speculation importers took advantage of the currency’s earlier gain to the highest in more than a week to buy dollars at a cheaper rate.
The won fell 0.2 percent to close at 1,140.24 per dollar in Seoul after climbing as much as 0.4 percent to the strongest level since April 21, according to data compiled by Bloomberg. It advanced in the past five weeks, the longest stretch since May last year. The currency rose during the morning session as receding bets for U.S. interest-rate increases added to weakness in the greenback.
"Following the won’s gains, the market is taking a breather and Korean importers’ dollar demand also rose," said Jeon Seung Ji, a Seoul-based currency analyst at Samsung Futures Inc. "Earlier reaction to the dollar’s weakness and the yen’s strength seems to be dissipating."
The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 of its major peers, dropped to the lowest level in a year after a report on Monday showed manufacturing growth slowed in April. There is just a 12 percent chance the Federal Reserve will raise rates by its June meeting, down from 24 percent a month ago.
“The dollar’s weakness has progressed quite a bit, and there’s not much room for further declines," said Paik Seok Hyun, an economist at Shinhan Bank in Seoul.
South Korea’s bonds rose. The three-year yield declined two basis points to 1.45 percent and the 10-year yield fell one basis point to 1.8 percent, according to Korea Exchange.