Korean Won Snaps Two-Day Advance Ahead of Fed, BOJ Meetingsby
Weakness beyond 1,140 per dollar likely limited: NH Futures
South Korea’s currency is Asia’s best performer this month
South Korea’s won fell for the first time in three days after a gauge of the dollar reached a two-month high ahead of central bank meetings in the U.S. and Japan this week.
The Bloomberg Dollar Spot Index held a three-week advance amid speculation that the Federal Reserve will signal at the meeting it is moving toward raising interest rates. The Kospi Index of shares rose, snapping a four-day loss, the longest streak in almost six weeks. Bonds were little changed.
“The dollar has turned stronger lately as the market appears to be speculating hawkish comments from the Fed, possibly signaling a rate hike as early as September,” said Min Gyeong Won, a currency analyst at NH Futures Co. in Seoul. “Investors are not likely to place meaningful bets until we have a clearer picture on major central banks’ direction later in the week.”
The won declined 0.2 percent to 1,136.77 per dollar as of the 3 p.m. close in Seoul, according to prices from local banks compiled by Bloomberg. It has appreciated 1.3 percent this month, the best performance in Asia. The currency’s weakness beyond 1,140 would be “limited” as importers are likely to sell dollars at that level, Min said.
South Korean bonds were little changed with the three-year yield at 1.23 percent and the 10-year at 1.43 percent, exchange prices show.