Won Leads Asian Gains as U.S. Inflation Data Weaken Greenback

  • China to release GDP, industrial, retail figures this morning
  • Investors looking for any excuse to sell won: SEB’s Yokota

South Korea’s won headed for its biggest two-day gain in almost a month after U.S. consumer-price data pushed down the dollar and as investors waited for the release of a raft of reports on the Chinese economy.

The won rose 0.5 percent to 1,124.07 a dollar as of 10:01 a.m. in Seoul, following an 0.8 percent advance on Monday. That put it on track for the biggest two-day gain increase Sept. 23. The Malaysian ringgit strengthened 0.2 percent to 4.1865. The Bloomberg Dollar Spot Index, which measures the greenback against 10 peers, fell 0.1 percent and is down 0.6 percent this week.

The release of mixed U.S. manufacturing data on Monday and then consumer prices excluding food and fuel costs that rose less than forecast on Tuesday are spurring speculation that even if the Federal Reserve raises interest rates this year, its monetary policy will remain accommodative. Chinese third-quarter economic growth as well as retail sales and industrial production numbers are due later this morning.

“Generally the dollar is weaker because we had weak U.S. data overnight,” said Sean Yokota, head of Asia strategy at Skandinaviska Enskilda Banken AB in Singapore. “China GDP will get the most attention and the risk is to the downside,” Yokota said, adding that the market was looking for any signs of weakness to sell the won.

Samsung Electronic Co.’s recall of its Note 7 smartphones and mounting risks for the South Korean economy are adding downward pressure on the won, which is forecast to weaken over the next 12 months.

“We could see rising volatility in the currency market after the Chinese GDP data,” Ha Keon-hyeong, an economist at Shinhan Investment Corp. in Seoul. said in a note on Wednesday.

South Korean bonds rose, with the yield on the three-year notes falling two basis points to 1.34 percent. The 10-year yield dropped three basis points to 1.59 percent.

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