(Corrects headline to show bonds fell.)
The won rose and government bonds fell after South Korea’s exports unexpectedly gained in May and the trade surplus climbed to the highest in more than 2 1/2 years, easing concerns about an economic slowdown.
The trade excess more than doubled from April as overseas shipments increased 3.2 percent from a year ago, with improving demand from the U.S. and China countered the impact of a weak yen, the trade ministry said June 1. The median estimate in a Bloomberg News survey of 12 economists was for a 0.9 percent decline. The won fell 2.5 percent last month on concerns an improving U.S. economy will prompt the Federal Reserve to scale back its $85 billion in monthly debt purchases that have fueled demand for emerging-market assets.
“South Korea’s trade surplus supported the won,” said Son Eun Jeong, an analyst at Woori Futures Co. in Seoul. “But the globally strong dollar may resume strengthening on bets the Fed will taper its bond buying as U.S. economic data improves.”
The won gained 0.2 percent to 1,127.40 per dollar as of 10:39 a.m. in Seoul, according to data compiled by Bloomberg. It touched 1,133.72 per dollar on May 29, the lowest level since April 11. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, rose eight basis points, or 0.08 percentage point, to 9.27 percent.
South Korea’s imports fell 4.8 percent from a year earlier in May, the ministry said, the fourth straight decline. The trade surplus was $6 billion, the highest since October 2010. The stronger-than-expected trade balance will support gross domestic product growth in the second quarter, Ronald Man, Hong Kong-based economist with HSBC Holdings Plc, wrote in a report.
South Korea’s Purchasing Managers’ Index for May fell to 51.1 from 52.6 in April, the HSBC and Markit Economics said today. Fifty is the dividing line between expansion and contraction.
The yield on South Korea’s 2.75 percent government bonds due March 2018 rose one basis point to 2.90 percent, prices from Korea Exchange Inc. show. That’s the highest level for a five-year note since Feb. 4.
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