Bloomberg News

Korean Won Gains, Paring Weekly Drop, as Global Funds Buy Stocks

August 16, 2012

The South Korean won rose, paring a weekly decline, as optimism the nation’s economy will withstand European turmoil lured global investors to increase purchases of domestic stocks. Bonds are set for a second weekly loss.

Exchange data showed overseas investors bought $3.9 billion more local shares than they sold this month, the biggest net purchases among 11 Asian nations tracked by Bloomberg. Government data yesterday showed the jobless rate fell to a seven-month low of 3.1 percent in July from 3.2 percent in June.

“We expect persistent foreign stock purchases to shore up the won quite well, together with exporter settlements,” said Jeon Seung Ji, a Seoul-based currency analyst at Samsung Futures Inc. “And hopes for more stimulus are still alive which will help fuel risk appetite.”

The won climbed 0.2 percent to 1,132.10 per dollar at 9:21 a.m. in Seoul, according to data compiled by Bloomberg. The currency fell 0.2 percent this week, the first loss in a month. One-month implied volatility, a measure of exchange-rate swings used to price options, was little changed at 7.3 percent.

Sales at major Korean department stores fell for the second straight month in July, data showed today and the central bank may cut its benchmark interest rate next month, helping to support demand, said An Ki Tae, an economist at Woori Investment & Security in Seoul.

The yield on the government’s 3.5 percent bonds due March 2017 fell three basis points, or 0.03 percentage point, to 3.06 percent, Korea Exchange Inc. prices show. It jumped 16 basis points this week. Three-year debt futures were at 105.67, from 105.63 yesterday and 106.19 at the end of last week.

To contact the reporter on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net;

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net.


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