Bloomberg News

South Korean Bonds Fall After Interest-Rate Meeting; Won Rises

January 10, 2013

South Korea’s three-year bonds fell, with yields rebounding from a record low, as the central bank kept borrowing costs unchanged.

The Bank of Korea left its seven-day repurchase rate at 2.75 percent today in a decision predicted by all but one of 14 analysts surveyed by Bloomberg. One had forecast a 25 basis point cut, after similar moves at reviews in July and October. The won, the best performer of the past year among 16 major currencies tracked by Bloomberg, climbed to a 17-month high.

“There are some signs the Korean and the global economies may have bottomed, reducing the need for an interest rate cut,” said Kong Dong Rak, fixed-income analyst at Hanwha Investment & Securities Co. in Seoul. “The Bank of Korea has already cut rates last year to help the economy and too many rate reductions could weaken the impact of a cut.”

The yield on South Korea’s 2.75 percent bonds due 2015 climbed four basis points, or 0.04 percentage point, to 2.74 percent as of 10:06 a.m. in Seoul, according to Korea Exchange prices. It fell to 2.70 percent yesterday, the lowest for a benchmark three-year note in data going back to 2000.

The won gained 0.4 percent to trade at 1,056.38 against the dollar, according to data compiled by Bloomberg. That’s the highest level since Aug. 4, 2011.

Finance Minister Bahk Jae Wan said last week he was concerned about herd behavior in the foreign-exchange market and may introduce measures to curb the won’s volatility.

To contact the reporter on this story: Seyoon Kim in Seoul at

To contact the editor responsible for this story: James Regan at

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