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July 1 (Bloomberg) -- South Korea’s won rose for a second week and reached its highest level in almost three years after a government report today showed inflation accelerated last month.
Consumer prices rose 4.4 percent from a year earlier, after a 4.1 percent gain in May, exceeding the central bank’s 4 percent upper limit for a sixth straight month. Exports increased 14.5 percent, resulting in a trade surplus of $3.3 billion, separate data showed. The won also strengthened as Greece approved measures to receive further European Union aid.
“The rise in consumer prices is reinforcing market sentiment that authorities may allow the won to appreciate, in order to alleviate price pressures,” said Byeon Ji Young, currency analyst at Woori Futures Co. in Seoul. “Optimism that Greece will avoid a default helped boost the currency this week, even though there still is speculation the government may try to cap a rapid won appreciation.”
The won rose 1.1 percent this week to 1,066.65 per dollar as of the 3 p.m. close in Seoul, according to data compiled by Bloomberg. The currency earlier touched 1,063.65, its strongest level since Aug. 22, 2008. It gained 0.1 percent today.
Greek Prime Minister George Papandreou’s drive to stave off the euro area’s first sovereign default stayed on track after lawmakers backed a bill to authorize an austerity plan required to keep rescue aid flowing.
The yield on South Korea’s 4 percent government bonds due March 2016 climbed one basis point to 4.04 percent, according to prices from Korea Exchange Inc. The rate increased eight basis points this week.
--Editors: Sandy Hendry, Simon Harvey
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