Oct 20, 2014 2:52 AM ET
South Korea’s won rose the most in more than a week and government bonds fell as improved data from the world’s biggest economy supported demand for riskier assets.
The MSCI Asia Pacific Index (MXAP) of shares advanced 2.1 percent, following a rally in the Standard & Poor’s 500 gauge as reports on Oct. 17 showed U.S. housing starts climbed to a 1.02 million annualized rate in September and consumers were the most optimistic in seven years in October. Overseas funds bought more South Korean equities than they sold today for the first time this month, exchange data show.
“Risk sentiment increased after a rebound in U.S. equities led to a rally in Asian stocks,” said Lee Dae Ho, a Seoul-based currency analyst at Hyundai Futures Corp. “The won’s gains will depend on whether foreign investors continue to net purchase local stocks.”
The won appreciated 0.6 percent to 1,059.75 per dollar at the close in Seoul, according to prices compiled by Bloomberg. That’s the biggest gain since Oct. 9. One-month implied volatility, a gauge of expected swings in the exchange rate used to price options, rose seven basis points, or 0.07 percentage point, to 8.17 percent.
“We’ll continue to see the won’s movements linked to equities for the time being as there’s not much other momentum,” said Lee Hyun Kyung, a Seoul-based currency trader at Busan Bank. Lingering concerns over global growth will cap the won’s gains, and the currency will probably trade between 1,055 per dollar and 1,065 this week, he said.
Bond Sale
The S&P 500 Index rose 1.3 percent on Oct. 17 as the Thomson Reuters/University of Michigan preliminary sentiment index for October increased to 86.4, the strongest since July 2007.
South Korea’s finance ministry sold 10-year bonds today at a yield of 2.782 percent, according to a statement on its website.
The yield on government notes due June 2017 climbed one basis point to 2.26 percent, Korea Exchange prices show. The yield on five-year debt increased two basis points to 2.45 percent.