The won rose for a second day as bets on further monetary easing in South Korea fade before the US Federal Reserve meets to review policy.
The current interest rate is supportive of the economy, Bank of Korea (BOK) Governor Lee Ju-yeol said on Friday after policymakers unanimously decided to keep the seven-day repurchase rate at a record-low 1.5 percent.
The Bloomberg Dollar Spot Index, which measures the US dollar against 10 peers, fell for a third day before the Fed meets tomorrow and on Thursday to discuss whether to raise borrowing costs for the first time in almost a decade, which would reduce the allure of emerging-market assets.
The won rose 0.1 percent to close at 1,183.23 against the US dollar in Seoul, data compiled by Bloomberg showed.
The currency earlier reached 1,177.48, the highest since Sept. 2, paring this year’s decline to 7.8 percent.
“Weakened expectations for rate cuts by the BOK support the won,” Samsung Futures Inc currency analyst Ji Jeon-seung said.
“[US] dollar-buying positions will decrease as uncertainties about the outcome of the Fed meeting result make traders cautious,” he added.
Any shock to South Korea’s economy from the Fed’s rate increase is likely to be limited, while external risks such as instabilities in emerging markets are significantly high, Lee said on Friday.
Overseas investors have pulled more than US$1.1 billion from South Korean shares this month, while investing a net US$279 million in local bonds.
Government bonds fell, with the three-year yield rising one basis point to 1.67 percent, Korea Exchange prices showed. The 10-year yield climbed three basis points to 2.27 percent.
original source: http://www.taipeitimes.com/News/biz/archives/2015/09/15/2003627719