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South Korea’s won fell, touching a two-week low, on concern the nation’s exports will slow further as global policy makers struggle to reverse an economic slowdown. Bonds were little changed.
Official data this month showed exports slumped 8.8 percent in July from a year earlier, the biggest drop in almost three years, while the central bank kept interest rates unchanged at 3 percent. Euro-area finance ministers are expected to meet in Athens this week to discuss Greek Prime Minister Antonis Samaras’ request for a two-year extension of the country’s fiscal adjustment program.
“Investors are cautious and waiting to see if the politicians in Europe will be able to do something to turn things around,” said Frances Cheung, a strategist at Credit Agricole CIB in Hong Kong. “South Korea’s exports aren’t performing well. Although the central bank didn’t cut rates this month, we’re still expecting one reduction this year.”
The won fell 0.1 percent to 1,135.55 per dollar at the close in Seoul, data compiled by Bloomberg show. The currency touched 1,136.25 earlier, the weakest level since Aug. 3. One- month implied volatility, a measure of exchange-rate swings used to price options, dropped 15 basis points, or 0.15 percentage point, to 7.33 percent.
Asian stocks dropped on concern China won’t ease monetary policy. The world’s second-biggest economy has no intention of cutting banks’ reserve requirements in the short term, according to a weekend commentary in the Financial News, a newspaper controlled by the central bank.
Overseas investors added to their holdings of Korean shares last week, with net purchases of $1.22 billion, exchange data show.
The yield on the government’s 3.5 percent bonds due March 2017 climbed one basis point, or 0.01 percentage point, to 3.05 percent, Korea Exchange Inc. prices show. Three-year debt futures slipped 0.11 to 105.64 and the one-year interest-rate swap rose two basis points to 2.97 percent.
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