Won Gains, Bonds Fall as U.S. Data Supports Risk Appetite

By Jiyeun Lee - Oct 12, 2012 10:37 AM GMT+0400

South Korea’s won appreciated and government bonds declined for a second day as data showed jobless claims in the U.S. fell to a four-year low, supporting demand for riskier assets.

Applications for unemployment benefit in the world’s largest economy dropped to 339,000 in the week ended Oct. 6, the fewest since February 2008, official figures showed yesterday. Singapore’s central bank unexpectedly kept its monetary policy stance today, saying it’s appropriate to contain inflation and ensure economic growth as the republic reported gross domestic product contracted last quarter.

“The U.S. jobs data and Singapore refraining from easing contributed to a weakening of the dollar against Asian currencies,” said Lee Jung Hyun, a Seoul-based currency trader at Industrial Bank of Korea.

The won appreciated 0.3 percent to 1,111.30 per dollar at the close in Seoul, according to data compiled by Bloomberg. The currency was little changed for the week. One-month implied volatility, a measure of exchange-rate swings used to price options, slipped 38 basis points, or 0.38 percentage point, to 5.88 percent today.

The Bank of Korea lowered the benchmark interest rate for the second time this year to 2.75 percent yesterday, while revising its 2012 economic growth forecast lower to 2.4 percent from a July estimate of 3 percent.

The yield on the 2.75 percent notes due September 2017 climbed one basis point to 2.82 percent, Korea Exchange Inc. prices show. The rate was unchanged for the week. The one-year interest-rate swap held at 2.77 percent.

To contact the reporter on this story: Jiyeun Lee in Seoul at jlee1029@bloomberg.net

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