Bloomberg News

Korean Won Erases Gains on Speculation Importers Bought Dollars

December 12, 2011

Dec. 12 (Bloomberg) -- South Korea’s won closed little changed, erasing an earlier gain on speculation importers bought dollars to settle bills. Government bonds were steady.

The currency rose as much as 0.7 percent today after European leaders agreed on new fiscal measures to contain the region’s debt crisis, supporting demand for riskier assets. The Kospi Index of shares advanced 1.3 percent after last week’s European summit resulted in an accord that tightens budget rules and provides an extra 200 billion euros ($267 billion) of financial aid for euro-zone nations. U.K. Prime Minister David Cameron refused to back the effort.

“The positive sentiment about Europe wasn’t so strong among investors,” said Yu Won Jun, a Seoul-based currency trader at Korea Exchange Bank. “The won reversed movements as importers bought dollars.”

The won closed at 1,146.95 per dollar in Seoul, little changed from 1,146.82 on Dec. 9, according to data compiled by Bloomberg.

South Korea’s economic expansion will slow to 3.7 percent in 2012 from 3.8 percent this year and 6.2 percent in 2010, the finance ministry said in an e-mailed statement today.

Finance Minister Bahk Jae Wan said today that growth may miss the government’s forecast next year if Europe’s debt problems deteriorate. Moody’s Investors Service said today that the European Union summit last week didn’t lower the risk of credit-ranking revisions.

The yield on South Korea’s 3.5 percent bonds due September 2016 was unchanged at 3.52 percent, Korea Exchange Inc. prices show.

--Editors: Anil Varma, Andrew Janes

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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