June 16 (Bloomberg) -- South Korea’s won fell to a three- week low as Europe’s deepening debt crisis cooled demand for emerging-market assets. Government bonds gained.
Greek Prime Minister George Papandreou will reshuffle his Cabinet and seek a confidence vote today, battling to control a shrinking majority and push through austerity measures demanded by international lenders. The political turmoil came as European Union talks on forging a new bailout to prevent the first euro- area default stalled.
“Investors are concerned about the Greek debt crisis which doesn’t seem like it’ll be resolved any time soon,” said Han Sung Min, currency dealer at Busan Bank in Seoul. “That’s prompting investors to favor safer assets and dump riskier assets, including the won.”
The won dropped 0.6 percent to close at 1,089.73 per dollar, according to data compiled by Bloomberg. It touched 1,091.53, the weakest level since May 26.
Five-year bonds advanced for the first time in three days. The yield on South Korea’s 4 percent notes due March 2016 dropped nine basis points, or 0.09 percentage point, to 3.88 percent, according to prices from Korea Exchange Inc. That was the biggest drop in the yield since June 2.
A government report showed sales at major South Korean department stores expanded at the slowest pace in three months in May, rising 8.7 percent, as frequent rain and cool weather damped demand for summer clothes.
--Editors: Sandy Hendry, James Regan
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