Nov. 2 (Bloomberg) -- South Korea’s won fell for a third day and government bonds rose as concern a Greek referendum will derail Europe’s bailout plan deterred risk-taking and bolstered demand for dollars.
Greece will proceed with a referendum on the bailout terms, government spokesman Angelos Tolkas said yesterday. The proposal for a vote “surprised all of Europe,” French President Nicolas Sarkozy said yesterday, before leaders from the Group of 20 nations meet Nov. 3-4 in Cannes, France. The U.S. Federal Open Market Committee is expected to maintain a near-zero benchmark interest rate after a policy meeting concludes today, according to economists surveyed by Bloomberg.
“Renewed uncertainties over Greece’s debt issues is dragging the won down,” said Lee Jung Hyun, a Seoul-based currency dealer with Industrial Bank of Korea. “Expectations for the G-20 summit and the FOMC meeting this week, and exporters’ selling dollars to convert income limited currency declines.”
The won slid 0.7 percent to 1,121.90 per dollar in Seoul, according to data compiled by Bloomberg. The currency earlier fell as much as 1.7 percent. The Standard & Poor’s 500 Index of U.S. shares dropped 2.8 percent in New York yesterday, the biggest decline in a month, and the Kospi Index of Korean equities fell 0.6 percent today.
Greece’s vote “dramatically raises the stakes for Greece and the euro zone as a whole,” Fitch Ratings said in a statement yesterday.
South Korea’s foreign exchange reserves rose to $310.98 billion last month from $303.38 billion in September, central bank data showed today. The amount of South Korea’s local- currency bonds owned by overseas investors rose by 1.6 trillion won ($1.4 billion) to a record 86.7 trillion won last month, the Financial Supervisory Service said today.
The government’s benchmark three-year bonds rose for a third day, pushing their yield to a two-week low. The yield on South Korea’s 3.5 percent bonds due June 2014 fell one basis point, or 0.01 percentage points, to 3.46 percent, Korea Exchange Inc. prices show.
--Editors: Sandy Hendry, Brett Miller
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