Bloomberg News

Korean Won Drops on Concern Global Economic Recovery Is Slowing

June 07, 2011

June 7 (Bloomberg) -- South Korea’s won dropped as U.S. labor-market data added to evidence the global economic recovery is losing traction, damping the outlook for exports.

U.S. payrolls grew at the slowest pace in eight months in May and the jobless rate unexpectedly climbed to 9.1 percent, the highest level this year, Labor Department data released on June 3 showed.

“Concerns that a global economic recovery led by the U.S. may be delayed is damping demand for riskier assets,” said Jeong Mi Young, a currency analyst at Samsung Futures Inc. in Seoul. “Some importers are trying to buy the dollar, limiting further declines in the won.”

The won dropped 0.2 percent to 1,082.05 per dollar from June 3 as of the 3 p.m. close in Seoul, according to data compiled by Bloomberg. Korean financial markets were closed yesterday for a holiday. The currency has strengthened 4.1 percent this year.

South Korea’s exchange rate is determined by economic fundamentals and supply and demand, and the government hasn’t tried to artificially weaken the won to help the economy, Finance Minister Bahk Jae Wan said in parliament in Seoul today.

The government’s five-year bonds gained, with the yield on the notes due March 2016 dropping four basis points, or 0.04 percentage point, to 3.79 percent, according to prices from Korea Exchange Inc.

--Editors: Ven Ram, Andrew Janes

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

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net


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