Won Is Biggest Gainer Among Peers as Brexit Pushes Back Fed BetsBy
Fed’s dovish stance "will probably continue:" Shinhan
Kospi share index gains 1.1 percent, snaps two-day decline
South Korea’s won rose the most in more than a week as demand for the dollar waned amid speculation the U.K.’s vote to leave the European Union will make the U.S. Federal Reserve reluctant to raise interest rates any time soon.
The won was the biggest gainer among the dollar’s 16 major counterparts after a gauge of the greenback dropped 0.1 percent Wednesday, while the odds of a U.S. rate hike this year slipped to 12 percent from 44 percent on June 22, the day before the U.K. referendum. Minutes of the Fed’s meeting last month signaled the central bank was already losing confidence in its need to tighten. Friday’s U.S. payrolls will be closely watched for clues on future policy, said Ha Keon Hyeong, an economist at Shinhan Investment Corp. in Seoul.
“The Fed’s dovish stance, as attested in minutes, will probably continue, given a lot of uncertainties right now in global economies, especially after Brexit,” Ha said. “U.S. job figures this week will be looked into for sure, but even if they come out well, the Fed is not likely to turn hawkish soon and neither will the market.”
The won rose 0.96 percent to 1,154.55 per dollar as of the 3 p.m. close in Seoul, halting a three-day slide, the longest losing streak in 10 weeks, according to prices from local banks compiled by Bloomberg.
The Kospi index of shares advanced 1.1 percent after falling for two sessions and the MSCI Emerging Market Index rose 0.8 percent. Investors are pricing in no chance of an interest-rate increase at the Fed’s July 26-27 meeting, futures contracts show.
The yield on South Korea’s three-year notes was little changed at 1.212 percent after reaching a record closing low of 1.207 on Wednesday. The yield for 10-year bonds closed at an unprecedented 1.381 percent.
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