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Korean Won Gains After Goldman Raises GDP Forecast; Bonds Drop
South Korea’s won strengthened for the first time in five days after Goldman Sachs Group Inc. raised its 2010 economic growth forecast and China pledged to sustain “relatively fast” expansion, supporting exports.
The won led gains among regional currencies, having last week recorded the biggest loss as purchasing managers’ surveys showed manufacturing growth was slowing in the U.S., Europe and China. The Bank of Korea will keep its benchmark interest rate at a record-low 2 percent at a review this week, according to seven of 10 economists surveyed by Bloomberg. Three predicted a quarter of a percentage point increase.
“Offshore players are selling dollars more than expected,” said Ha Jun Woo, a currency trader for Daegu Bank Ltd. in Seoul. “We’re also seeing preemptive bets ahead of the central bank’s monetary policy meeting. If interest rates rise, that will push investors to sell dollars and buy the won.”
The won strengthened 0.5 percent to 1,222.35 per dollar as of 10:44 a.m. in Seoul, after sliding 1.1 percent last week, according to data compiled by Bloomberg. The currency will trade between 1,220 and 1,238 per dollar today, Ha forecast.
Gross domestic product will rise 5.3 percent this year, more than a previous forecast of 4.8 percent, and the central bank will likely raise interest rates this quarter, Goohoon Kwon, a Seoul-based economist at Goldman, wrote in a report published yesterday. He raised his estimate of first-half growth to 7.3 percent from 6.2 percent to reflect better-than-expected exports and kept his forecast for the final six months at 3.4 percent.
China Demand
China will maintain policy continuity and flexibility to ensure “steady and relatively fast” growth, Premier Wen Jiabao said yesterday after a visit to businesses in southern Hunan province. The nation is the biggest buyer of Korean exports.
South Korea’s three-year bonds fell for the first time in five days after Citigroup Inc. left the country out of its World Government Bond Index following a review. Citigroup in July 2007 estimated that global investors with $1 trillion tracked their fund performance against its global benchmark.
The yield on the 3.75 percent note maturing in June 2013 climbed three basis points to 3.84 percent, according to Korea Stock Exchange. A basis point is 0.01 percentage point.
Source: Bloomberg
The won led gains among regional currencies, having last week recorded the biggest loss as purchasing managers’ surveys showed manufacturing growth was slowing in the U.S., Europe and China. The Bank of Korea will keep its benchmark interest rate at a record-low 2 percent at a review this week, according to seven of 10 economists surveyed by Bloomberg. Three predicted a quarter of a percentage point increase.
“Offshore players are selling dollars more than expected,” said Ha Jun Woo, a currency trader for Daegu Bank Ltd. in Seoul. “We’re also seeing preemptive bets ahead of the central bank’s monetary policy meeting. If interest rates rise, that will push investors to sell dollars and buy the won.”
The won strengthened 0.5 percent to 1,222.35 per dollar as of 10:44 a.m. in Seoul, after sliding 1.1 percent last week, according to data compiled by Bloomberg. The currency will trade between 1,220 and 1,238 per dollar today, Ha forecast.
Gross domestic product will rise 5.3 percent this year, more than a previous forecast of 4.8 percent, and the central bank will likely raise interest rates this quarter, Goohoon Kwon, a Seoul-based economist at Goldman, wrote in a report published yesterday. He raised his estimate of first-half growth to 7.3 percent from 6.2 percent to reflect better-than-expected exports and kept his forecast for the final six months at 3.4 percent.
China Demand
China will maintain policy continuity and flexibility to ensure “steady and relatively fast” growth, Premier Wen Jiabao said yesterday after a visit to businesses in southern Hunan province. The nation is the biggest buyer of Korean exports.
South Korea’s three-year bonds fell for the first time in five days after Citigroup Inc. left the country out of its World Government Bond Index following a review. Citigroup in July 2007 estimated that global investors with $1 trillion tracked their fund performance against its global benchmark.
The yield on the 3.75 percent note maturing in June 2013 climbed three basis points to 3.84 percent, according to Korea Stock Exchange. A basis point is 0.01 percentage point.
Source: Bloomberg
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