Won Falls to Two-Month Low as China Weighs Amid Dollar Strength

  • Chinese, U.S. retail sales show divergence in economic health
  • South Korea sold 800 billion won of 10-year bonds on Monday

South Korea’s won fell to a two-month low as Chinese data issued over the weekend weighed on emerging markets, while U.S. retail sales figures provided support to the dollar.

The won dropped for a second day after Chinese retail sales and factory output came in below estimate. Underscoring the disparities between South Korea’s two biggest trading partners, U.S. high-street sales beat forecasts. While that helped the Bloomberg Dollar Spot Index round off a second weekly gain, futures continue to show limited odds for a Federal Reserve rate increase this year that could crimp demand for developing-nation assets.

“Weakness in the latest Chinese economic figures has dampened appetite for emerging-market assets,” said Jeon Seung Ji, a Seoul-based currency analyst at Samsung Futures Inc. “Retail data renewed speculation of a U.S. rate hike, and this has turned the dollar stronger.”

The won dropped 0.7 percent to 1,179.60 per dollar at the close in Seoul and earlier reached 1,180.75, its lowest level since March 16, according to prices from local banks compiled by Bloomberg. The Kospi stock index ended 0.1 percent higher, after declining as much as 0.3 percent earlier.

South Korea’s three-year bond yield was steady at 1.45 percent, after on Friday extending its rise toward the central bank’s record-low 1.5 percent benchmark rate which was kept on hold last week. The 10-year yield was unchanged at 1.77 percent. The government sold 800 billion won ($679.5 million) of notes due in 2026 on Monday at 1.77 percent.

China’s retail sales rose 10.1 percent in April from a year earlier, while industrial production climbed 6 percent. That compared with separate forecasts in Bloomberg surveys for 10.6 percent and 6.5 percent. In the U.S., the sales increased 1.3 percent from a month earlier versus a 0.8 percent estimate and a contraction the previous month.

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