Bloomberg News

Korea Won Falls, Bonds Gain as Italy Debt Yield Jumps at Auction

November 15, 2011

Nov. 15 (Bloomberg) -- South Korea’s won fell and government bonds advanced for the first time in three days as a jump in Italy’s borrowing costs reignited concern Europe’s debt crisis will worsen, sapping demand for emerging-market assets.

Italy sold 3 billion euros ($4 billion) of five-year bonds at a yield of 6.29 percent yesterday, the highest since June 1997 and up from 5.32 percent at the last auction on Oct. 13. Former European Union Competition Commissioner Mario Monti will form a new government in Italy after Silvio Berlusconi resigned as prime minister last week. The Kospi Index of shares fell 0.9 percent, after surging 4.9 percent in the last two trading days.

“The won has been moving within a range of 1,110 to 1,130 recently, changing directions upon daily news from Europe,” said Lee Jin Ill, a Seoul-based senior currency dealer at Hana Bank.

The won retreated 0.3 percent to 1,126.15 per dollar in Seoul, after gaining 1 percent in the last two trading days, according to data compiled by Bloomberg.

South Korea’s import prices rose 16 percent last month from a year earlier, the biggest gain in six months, central bank data showed today. Export prices rose 9.2 percent, the most since March 2009.

The yield on South Korea’s 3.5 percent debt due June 2014 fell three basis points, or 0.03 percentage point, to 3.37 percent, Korea Exchange Inc. prices show. The yield reached a two-month low of 3.34 percent on Nov. 10.

--Editors: James Regan, Brett Miller

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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