South Korea’s won advanced for a second day as China’s Premier Wen Jiabao signaled further steps are needed to support economic growth. Government bonds were little changed.
Wen warned the momentum for a recovery isn’t yet in place in South Korea’s largest export market, adding that the government needs to comprehensively assess the situation and recognize the problems, the official Xinhua News Agency reported yesterday. Federal Reserve Chairman Ben S. Bernanke will present his semi-annual report on the outlook for the U.S. economy to Congress this week. The Kospi Index climbed 0.3 percent after U.S. shares gained the most in two weeks.
“There were some expectations for China stimulus in the market, and the won was also supported by overseas funds selling the dollar to buy Korean bonds,” said Cho Hyun Seok, a Seoul- based currency trader for Standard Chartered Bank Korea.
The won strengthened 0.3 percent to 1,147.00 per dollar at the close in Seoul, according to data compiled by Bloomberg. The currency’s one-month implied volatility, a measure of exchange- rate swings used to price options, slid 28 basis points, or 0.28 percentage point, to 7.70 percent.
China’s gross domestic product expanded 7.6 percent in the second quarter from a year earlier, the sixth consecutive slowdown, the statistics bureau said on July 13. The Bank of Korea reduced its 2012 economic-growth forecast to 3 percent last week from the April projection for a 3.5 percent growth.
The yield on the government’s 3.25 percent bonds due June 2015 was unchanged at 2.95 percent, Korea Exchange Inc. prices show. This matches the July 13 level which was the lowest for a benchmark three-year note since December 2010. Three-year debt futures slid 0.02 to 105.74 and the one-year interest-rate swap climbed three basis points to 2.95 percent.
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