Bloomberg News

Korea Won Reaches Five-Week High on China Data, Europe Summit

October 25, 2011

Oct. 25 (Bloomberg) -- South Korea’s won touched a five- week high as manufacturing data in China brightened the outlook for exports and speculation Europe will contain its debt crisis cooled demand for dollars. Bonds advanced.

The European Financial Stability Facility can be bolstered under two models that may be combined and implemented “quickly,” a document provided to German lawmakers yesterday showed. Europe’s leaders will meet tomorrow for a second summit to agree on a solution to the crisis. The preliminary Chinese purchasing managers’ index advanced to 51.1 from a final reading of 49.9 last month, data showed yesterday. A reading above 50 signals expansion.

“The won will extend gains as investors look forward to the European summit tomorrow,” said Yu Won Jun, a Seoul-based currency dealer with Korea Exchange Bank. “China’s manufacturing data is supporting the won as investors see it as key indicator for global economy.”

The won strengthened 0.5 percent to 1,129.16 per dollar in Seoul, according to data compiled by Bloomberg. The currency touched 1,124.55 earlier, the strongest level since Sept. 19.

The Bank of Korea will release minutes of its Sept. 8 rate meeting on its website at 4 p.m. in Seoul.

The government’s benchmark three-year bonds rose for the first time in three days, pushing yields down from a three-week high. The yield on the 3.5 percent notes due June 2014 fell one basis point, or 0.01 percentage point, to 3.53 percent, Korea Exchange Inc. prices show.

--Editor: James Regan, Ven Ram

To contact the reporter on this story: Jiyeun Lee in Seoul at jlee1029@bloomberg.net

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


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