Won Rebounds From Worst Week in a Month as Brexit Prospects Waneby
Oil adds to Friday’s rally as global sentiment improves
Korean bonds fall; yields reached record lows last week
The South Korean won rose the most in almost two weeks and the nation’s stocks led an advance in emerging Asia as appetite for higher-yielding assets returned after polls showed the campaign for the U.K. to stay in the European Union gathering momentum.
The referendum on June 23 is being watched by governments and investors amid concern a Brexit vote will spark global financial turmoil and outflows from emerging markets. Campaigning restarted on Sunday after being suspended following the murder of politician Jo Cox, with the ‘Remain’ group gaining ground. The country’s sovereign bonds fell, while oil rebounded.
South Korea’s currency climbed 1.1 percent to 1,160.77 per dollar as of the 3 p.m. close in Seoul, the biggest gain since June 7 on a closing basis, according to prices from local banks compiled by Bloomberg. It reached 1,160.32, the strongest since June 10. The won slid 0.7 percent in the five days to June 17, the steepest weekly decline since May 20.
“The earlier anxiety over Brexit is waning and we are seeing appetite for riskier assets returning, as attested by gains in oil and stocks,” said Jeon Seung Ji, a currency analyst at Samsung Futures Inc. in Seoul. Won gains will be limited to around the 1,160-1,164 area, Jeon said.
The Kospi index of shares rose 1.4 percent, headed for the biggest advance in more than two months. The three-year bond yield climbed two basis points to 1.35 percent after hitting a record low of 1.31 percent last week, Korea exchange prices show. The 10-year yield rose three basis points to 1.63 percent after touching an all-time low of 1.58 percent on Thursday.
The government accepted 2,106 billion won ($1.8 billion) of bids at a 10-year bond auction on Monday from a total of 8,530 billion won, according to the Ministry of Strategy and Finance. The average yield on the notes was 1.62 percent.