Oct. 19 (Bloomberg) -- South Korea’s won touched a one- month high after the nation agreed to increase a currency-swap accord with Japan to $70 billion, helping to counter concern Europe’s debt crisis will worsen. Bonds rose.
Moody’s Investors Service cut Spain’s credit rating by two levels, its third downgrade since June 2010. German Chancellor Angela Merkel said yesterday that a European Union summit on Oct. 23 will mark an “important step,” though not the final one, in solving the debt crisis. Korean President Lee Myung Bak and Japanese Prime Minister Yoshihiko Noda reached the agreement including a one-year, $30 billion dollar swap line and a won-yen agreement of the same amount after a summit in Seoul today.
“Market players are finding it hard to take a strong position ahead of the European summit, making the won move within a certain range,” said Jeon Seung Ji, a currency analyst at Samsung Futures Inc. in Seoul. “Exporters’ selling dollars to convert income may support the currency.”
The won climbed 1.2 percent to 1,132.30 per dollar in Seoul, after weakening as much as 0.2 percent earlier, according to data compiled by Bloomberg. The currency touched 1,128.53, the strongest level since Sept. 19.
The government’s benchmark three-year bonds advanced for a second day. The yield on the 3.5 percent notes due June 2014 fell one basis point, or 0.01 percentage point, to 3.44 percent, Korea Exchange Inc. prices show.
--Editors: James Regan, Andrew Janes
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