Bloomberg News

Korea Won Falls Most in a Month on China Slowdown; Bonds Steady

March 04, 2013

The won fell the most in a month as slowing services and manufacturing growth in China damped South Korea’s export outlook. Bonds were little changed even as inflation unexpectedly eased in February.

Expansion in industries including retailing, transport and banking in Asia’s largest economy was the slowest in five months in February, an official purchasing managers showed yesterday. A manufacturing gauge also decreased on March 1. China is the largest destination for Korean goods. Consumer prices rose 1.4 percent from a year earlier, compared with the median estimate in a Bloomberg survey for a 1.6 percent increase, official figures showed today.

“China data was disappointing,” said Jeon Seung Ji, a Seoul-based currency analyst at Samsung Futures Inc. “The downside may be limited for the won as the market also received carried-over export deals from last month.”

The won fell 0.9 percent from its Feb. 28 close to 1,093.15 per dollar, according to Seoul Money Brokerage Services Ltd. That was the biggest decline since Jan. 28. Local financial markets were closed on March 1 for a public holiday. The won touched 1,093.75 earlier, the weakest level since Feb. 12.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, rose 13 basis points, or 0.13 percentage point, to 7.2 percent.

The yield on South Korea’s 2.75 percent government bonds due December 2015 was steady at 2.63 percent from Feb. 28, Korea Exchange Inc. prices show.

To contact the reporter on this story: Kyoungwha Kim in Singapore at +65-6212-1895 or kkim19@bloomberg.net

To contact the editor responsible for this story: James Regan at +852-2977-6620 or jregan19@bloomberg.net


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