Won Falls on Intervention Concern After Leading Post-Brexit Gainby
Currency halts four-day advance after rising most since 2011
Exports posted smallest contraction in a year in June
South Korea’s won fell on speculation the central bank will intervene after the currency led a post-Brexit rally in Asia last week, threatening exports just when they are showing signs of picking up.
The won halted a four-day advance that was driven by the government’s announcement of 20 trillion won ($17 billion) in stimulus. While data last week showed the smallest contraction in exports in a year, they have still fallen for 18 straight months through June. The Bank of Korea has cut its benchmark interest rate to a record-low 1.25 percent to revive growth, with the focus now on the July 14 policy decision.
“The Bank of Korea could intervene in the market,” said Jeon Seung Ji, a Seoul-based foreign-exchange analyst at Samsung Futures Inc. “Gains in the Korean won have been too fast.”
The currency dropped 0.2 percent to 1,146.73 per dollar at the close in Seoul, according to prices from local banks compiled by Bloomberg. The won climbed 3 percent last week, the most since 2011. It reached 1,143.38 on Friday, the strongest since May 3, and has recouped all its losses from the U.K.’s decision to leave the European Union.
The sovereign three-year notes declined, with the yield increasing one basis point to 1.23 percent, Korea Exchange prices show. The rate fell to a record low of 1.21 percent last week. The yield for 10-year bonds was little changed at 1.413 percent after dropping to a record low 1.4 percent earlier on Monday.