Oct. 31 (Bloomberg) -- South Korea’s won completed its biggest monthly advance since April 2009, supported by upbeat economic data and European efforts to resolve a debt crisis.
The currency climbed to a six-week high today, before retreating as Japanese intervention to weaken the yen sparked concern Korean policy makers may seek to combat won gains, according to Hwang Sun Min, Seoul-based dealer at Kookmin Bank. A government report today showed industrial output unexpectedly grew in September, while data earlier this month showed exports rose more than economists forecast and the current-account surplus was the second highest in 2011.
“Exporters have been faring well, providing a buffer to slowing demand at home,” said Kim Sung Soon, Seoul-based chief dealer at state-run Industrial Bank of Korea. “The won has been gaining upward momentum as Europe’s crisis showing signs of abating.”
The won rose 6.1 percent this month to close at 1,110.21 per dollar in Seoul, according to data compiled by Bloomberg. It fell 0.5 percent today after touching 1,100.05, the strongest level since Sept. 16 earlier. The currency, Asia’s best performer in October, slumped 9.5 percent in September as Europe’s debt crisis fueled demand for dollars.
Euro-region leaders agreed last week to expand a bailout fund to $1.4 trillion and persuaded bondholders to take 50 percent losses on Greek debt.
The yen weakened against more than 150 currencies tracked by Bloomberg as Japanese Finance Minister Jun Azumi said that he ordered the intervention because “speculative moves” in the currency failed to reflect Japan’s economic fundamentals.
South Korea’s industrial output gained 1.1 percent last month from August, when it decreased 1.9 percent, Statistics Korea said today. Economists expected a 0.4 percent drop, based on the median estimate in a Bloomberg survey. The current- account surplus jumped to $3.1 billion last month from $293 million in August, the central bank said on Oct. 28. Exports rose 19 percent from a year earlier and the jobless rate was 3.2 percent, earlier reports showed.
Skandinaviska Enskilda Banken AB said it is “outright bullish” on Asian currencies including the won, Singapore dollar and Indonesian rupiah for the final quarter of 2011 and the first quarter of 2012.
“Current-account surpluses are already starting to rise in Korea and we expect China, Indonesia and Singapore,” Sailesh K. Jha, Singapore-based head of Asia strategy at SEB, wrote in a report on Oct. 28. “What is more encouraging for Asian markets is that the U.S. and Japan economic recovery is continuing and getting more fully entrenched.”
South Korea’s benchmark five-year bonds advanced today, with the yield on the 3.5 percent notes due September 2016 sliding seven basis points to 3.62 percent, Korea Exchange Inc. prices show. The rate declined three basis points, or 0.03 percentage point, this month.
--Editors: James Regan, Sandy Hendry
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