Sept. 21 (Bloomberg) -- South Korea’s won fell for a third day after the International Monetary Fund cut its global growth forecast, damping the outlook for the nation’s exports. Bonds declined.
The IMF yesterday cut its estimate for world economic growth to 4 percent this year from 4.3 percent, and to 4 percent in 2012 from 4.5 percent. It predicted “severe” repercussions if Europe fails to contain its debt crisis. South Korea is expected to grow 4 percent this year and 4.4 percent next year, compared with previous projections of 4.5 percent and 4.2 percent, respectively.
The won fell 0.1 percent to 1,149.83 per dollar as of 3 p.m. in Seoul, extending its 3.2 percent slide over the previous two days, according to data compiled by Bloomberg. It had been up by as much as 0.7 percent earlier. The currency touched 1,156.50 yesterday, the weakest level since Dec. 22.
“Uncertainty about Europe’s debt crisis is making investors demand dollars,” said Ha Jun Woo, a Seoul-based currency dealer at Daegu Bank. “Players speculate the Federal Reserve announcement will be within expectations.”
The Federal Open Market Committee will probably announce plans to replace short-term Treasuries in its $1.65 trillion portfolio with long-term bonds, according to 71 percent of 42 economists surveyed by Bloomberg News.
A government report today showed the Korean unemployment rate fell to 3.1 percent in August, the lowest level since July 2008 and less than the 3.3 percent median estimate in a Bloomberg survey of economists. Finance Minister Bahk Jae Wan said at a government meeting today that the data reflects “strong” economic fundamentals and is a “big surprise.”
The yield on South Korea’s benchmark three-year bonds rose. The rate on the 3.5 percent debt due June 2014 climbed four basis points, or 0.04 percentage point, to 3.51 percent, Korea Exchange Inc. prices show. The yield reached a one-month high of 3.55 percent on Sept. 19.
--Editors: Andrew Janes, Simon Harvey
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