Won Falls Fourth Day on Dollar Rally Before Bank of Korea Meetsby
Korea's currency extends losing streak to longest in 11 weeks
Three of 18 economists predict BOK will cut rates on Friday
South Korea’s won fell for a fourth day amid speculation the Federal Reserve is still on course to raise U.S. interest rates this year while traders awaited a Bank of Korea policy meeting on Friday.
The won completed its longest losing streak in 11 weeks, and was the worst performer after the Malaysian ringgit among 24 emerging-market currencies tracked by Bloomberg. Fifteen of 18 economists predict the Bank of Korea will keep its benchmark rate at 1.5 percent on Friday, while three forecast a quarter-percentage-point cut.
“The dollar’s rebound and existing worries about emerging economies including China are pressuring the currency markets,” said Paik Seok Hyun, an economist at Shinhan Bank. “It’s not just the won, but other currencies that have taken a hit.”
The won fell 0.6 percent to 1,172.80 per dollar at the 3 p.m. close in Seoul after depreciating to 1,175.65, the weakest since March 17, according to prices from local banks compiled by Bloomberg. The four-day losing streak is the longest since the period through Feb. 22.
“All eyes are on the Bank of Korea," said Jeon Seung Ji, a currency analyst at Samsung Futures Inc. in Seoul. “It probably will not cut the benchmark rate, but expectations of a cut are certainly there.” The won will probably stay in a range of 1,160 to 1,180 per dollar this week, she said.
The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 peers, was little changed, after gaining 2.3 percent in the previous five days. The MSCI Emerging Markets Currency Index dropped for a seventh day, losing 0.1 percent
South Korea’s 10-year bond yield climbed one basis point to 1.77 percent, according to Korea Exchange. The three-year yield was little changed at 1.41 percent, closing at the same level as the record low reached Monday.