Bloomberg News

Korean Won Gains for Third Week as Moody’s Warning Hurts Dollar

June 03, 2011

June 3 (Bloomberg) -- South Korea’s won gained for a third week, its longest advance since April, reflecting reduced demand for dollars after Moody’s Investors Service said the U.S. was at risk of losing its Aaa credit rating.

The company said yesterday it expects to place the rating under review for a possible downgrade unless there is progress on increasing the debt limit by mid-July. European Union and International Monetary Fund officials will complete today a review of Greece’s plan for 78 billion euros ($113 billion) in asset sales and austerity measures as they prepare the nation’s second bailout in little more than a year.

“Optimism about euro-zone debt issues and concerns about the U.S. economy and its rating” underpinned the won’s gains, said Byeon Ji Young, a currency analyst at Woori Futures Co. in Seoul. “Concerns that the South Korean authorities won’t tolerate rapid won gains are limiting appreciation.”

The won advanced 0.2 percent this week to 1,080.08 per dollar at the 3 p.m. close in Seoul, according to data compiled by Bloomberg. The currency climbed 0.1 percent today.

The government’s benchmark three-year bonds gained this week. The yield on the 3 percent note due December 2013 dropped three basis points or 0.03 percentage point this week to 3.57 percent, according to prices from Korea Exchange Inc. The rate rose one basis point, or 0.01 percentage point, today.

--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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