South Korea’s Won Declines for Fifth Day as Dollar Holds Gains

  • Market turned ‘cautious’ after U.S. inflation: Samsung Futures
  • Traders await Federal Reserve and Bank of Japan meetings

South Korea’s won fell while other emerging Asian currencies were little changed as a gauge of the dollar hovered near a seven-week high after stronger-than-expected U.S. inflation data before meetings of the Federal Reserve and Bank of Japan this week.

The won is retreating for a fifth session as the market digests fresh strength in the greenback and a decline in investor appetite for higher-yielding assets after bond markets slumped last week in the lead-up to a raft of central bank meetings. South Korean financial markets opened Monday after being shut Wednesday through Friday last week for local holidays.

“The slightly better-than-expected U.S. CPI on Friday is keeping the U.S. dollar bid,” said Divya Devesh, a foreign-exchange strategist at Standard Chartered Plc in Singapore. “This week the focus will almost entirely be on the major central bank policy decisions, the BOJ and the Fed.”

The won slid 0.4 percent to 1,124.1 as of 10:07 a.m. in Seoul, with the Bloomberg Dollar Spot Index holding near the highest level since late-July reached Friday. South Korea’s currency was the worst performer in Asia, followed by the Philippine peso. The MSCI Emerging Markets Currency Index was up 0.1 percent and a gauge of developing-nation stocks rose 0.4 percent.

“Investors in Seoul are more comfortable with long positions on the dollar today as they grew more cautious after the U.S. CPI,” said Jeon Seung Ji, a currency analyst at Samsung Futures Inc. in Seoul. Market will likely respond sensitively to central bank related news flows from the U.S. and Japan, Jeon said, adding that the won will likely move in a range of 1,121 to 1,128 per dollar on Monday.

South Korean bonds were steady, with yield on 3-year sovereign note at 1.35 percent and 10-year note at 1.57 percent.

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