South Korean Bonds Drop on Fed Tapering Concern; Won Fluctuates South Korean government bonds fell and the won swung between gains and losses after the finance ministry said it may take preemptive steps to ease concern the Federal Reserve will rein in stimulus. A recovery in the nation’s private sector is weak, Finance Minister Hyun Oh Seok said at a meeting in Seoul today. Fed Bank of Chicago President Charles Evans indicated yesterday that a tapering of the U.S. central bank’s bond-buying program in September is possible. The yield on the 2.75 percent bonds due June 2016 rose three basis points, or 0.03 percentage point, to 2.94 percent, the first increase this week, according to Korea Exchange Inc. prices. The won fell 0.1 percent to 1,117.01 per dollar as of 10:44 a.m. in Seoul, data compiled by Bloomberg show. The currency earlier rose as much as 0.2 percent. “Evans fueled speculation the tapering will take place sometime this year, and Asian markets have been reacting to the Fed’s exit strategy,” said Son Eun Jeong, a currency analyst at Woori Futures Co. in Seoul. “The won has been holding well compared with other Asian currencies amid fund inflows.” One-month implied volatility, a measure of expected moves in the exchange rate used to price options, dropped four basis points to 7.09 percent, data compiled by Bloomberg show. Overseas investors bought 1.3 trillion won ($1.2 billion) more South Korean stocks than they sold in July after posting the biggest monthly sell-off in almost two years in June, the Financial Supervisory Service said in a statement today. Global funds purchased a net 1.7 trillion won of bonds last month. The Bank of Korea is forecast to hold interest rates at 2.5 percent at a monetary policy meeting tomorrow, according to 15 analysts surveyed by Bloomberg.
Posted on: Wed, 07 Aug 2013 02:52:32 +0000
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