Bloomberg News

Korean Won Gains on Improved Confidence, U.S. Recovery Signs; Bonds Steady

February 24, 2012

South Korea’s won rose the most in a week as upbeat economic data at home and in the U.S. spurred demand for riskier assets, helping emerging markets attract funds. Government bonds were little changed.

Domestic consumer confidence climbed to a three-month high in February, central bank figures showed today. The Dow Jones Industrial Average of U.S. stocks had its highest close since May 2008 yesterday after better-than-estimated jobs and housing data in the world’s biggest economy. The Kospi Index of shares gained 0.6 percent as overseas investors bought $554.6 million more of the nation’s shares than they sold this week through yesterday. Crude oil rose 0.6 percent to $108.48 per barrel, extending this year’s gain to 9.3 percent.

“Positive economic data in the U.S. and overseas stock gains are supporting the won,” said Yun Se Min, a Seoul-based currency dealer at Busan Bank in Seoul. “Still, rising oil prices may force South Korean oil companies to buy more dollars to settle import bills, limiting won gains.”

The won advanced 0.3 percent to 1,125.80 per dollar at the close in Seoul, according to data compiled by Bloomberg. For the week, it was little changed.

Applications for jobless benefits in the U.S. were unchanged in the week ended Feb. 18 at 351,000, the fewest since March 2008 and less than the median 355,000 forecast in a Bloomberg survey of economists. A report from the Federal Housing Finance Agency showed that a gauge of home prices jumped 0.7 percent in December, beating the 0.1 percent gain predicted in a separate poll.

The yield on South Korea’s 3.5 percent debt due September 2016 was steady at 3.56 percent, Korea Exchange Inc. prices show. The rate fell two basis points this week. Three-year bond futures declined 0.02 percent to 104.22 today and the one-year interest-rate swap fell one basis point to 3.49 percent.

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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