Wed, Mar 09, 2016 - Page 15 News List

Won ends seven-day rally as foreign funds pull out

HEADWINDS:Advocating intervention, analysts said that there is ‘still an overarching concern’ that export-oriented Asian economies would struggle


The won yesterday halted a seven-day rally as foreign funds pulled money from South Korean shares for the first time in two weeks.

The KOSPI fell the most in more than three weeks as Japan led a retreat in Asian equities. An export slump in China, South Korea’s biggest overseas market, deepened last month, an official report showed yesterday.

Eleven of 18 economists surveyed by Bloomberg expect the Bank of Korea to leave its policy rate at 1.5 percent on Thursday, with the rest projecting a cut to 1.25 percent.

“There’s concern that monetary policy will actually be something more dovish,” Mizuho Bank Ltd Singapore-based economist Vishnu Varathan said. “There’s still an overarching concern that the more export-focused economies in the region will continue to feel some of the headwinds.”

The won weakened 0.4 percent to 1,206.70 per US dollar in Seoul, according to data compiled by Bloomberg.

The currency strengthened 3.1 percent in the seven days through Monday, its longest winning run since December 2013. It is still the worst performer among Asian emerging markets this year, declining 2.8 percent. The KOSPI fell 0.6 percent, the most since Feb. 12.

Market instability in China, Japan and oil-producing nations is hurting exports and the government will take steps to boost jobs for youth and women, South Korean Minister of Finance Yoo Il-ho said on Monday.

A slowdown in global trade is making it harder for Chinese leaders, who are gathered in Beijing this week to set the nation’s economic plans, to keep growth at the targeted 6.5 percent to 7 percent range. China’s stocks yesterday fell for the first time in six days.

Three-year government bonds rose, pushing the yield down two basis points to 1.49 percent, Korea Exchange prices show. The 10-year yield dropped three basis points to 1.85 percent.

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