Bloomberg News

Korean Won Falls for First Time in Six Days on Growth Concern

June 02, 2011

June 2 (Bloomberg) -- South Korea’s won weakened for the first time in six days as U.S. manufacturing and employment data added to evidence the global economic recovery is losing traction, dimming the outlook for exports.

The U.S. Institute for Supply Management’s factory index fell last month to the lowest level since September 2009, data released yesterday showed. Employers in the world’s largest economy added 38,000 workers to payrolls, the fewest in eight months, according to ADP Employer Services. The MSCI Asia- Pacific Index of shares snapped a two-day rally after Moody’s Investors Service downgraded Greece’s credit rating.

“Moody’s downgrade of Greece’s rating on top of sluggish U.S. economic indicators is prompting investors to avoid buying riskier assets, weakening the won,” said Cho Young Bok, a currency dealer at Daegu Bank in Seoul. “Some exporters are trying to take profit after the won fell, repatriating their income.”

The won dropped 0.6 percent to 1,080.85 per dollar at the 3 p.m. close in Seoul, according to data compiled by Bloomberg. The currency has appreciated 3.8 percent this year.

The government’s benchmark three-year bonds gained, with the yield on the 3 percent note due December 2013 falling nine basis points, the most since March 10, to 3.56 percent, according to prices from Korea Exchange Inc.

South Korean bonds held by overseas investors more than doubled by a net 2.65 trillion won ($2.5 billion), the biggest jump in seven months, to 78.8 trillion won as of May 31, the Financial Supervisory Service said today. Overseas investors sold a net 2.8 trillion won of the nation’s stocks last month, compared with net purchases of 4.4 trillion won in April.

--Editors: Ven Ram, Brett Miller

To contact the reporter on this story: Seyoon Kim in Seoul at skim7@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net


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