The South Korean won rose to a one-month high on speculation the country would attract more fund inflows as its current-account surplus widens.
The currency advanced for a fourth day as the Bank of Korea said in a statement yesterday that the excess in the broadest measure of trade increased to US$4.98 billion last month from a revised US$2.71 billion in February.
The won also climbed as the US dollar weakened against most of its major peers, including the yen, after data on Friday last week showed first-quarter GDP in the US increased at a slower-than-expected 2.5 percent annualized rate.
“A bigger current-account surplus signals there will be more dollar inflows into the nation,” said Hong Seok-chan, analyst at Daishin Economic Research Institute in Seoul. “Globally, the dollar weakened after the US GDP numbers, prompting the yen to gain and the won to follow suit. Still, concerns that authorities may try to stem the won’s gain and possible North Korea threats may limit further rise.”
The won gained 0.4 percent to 1,107.30 per US dollar in Seoul, according to data compiled by Bloomberg. It earlier touched 1,106.65 won, its highest since March 27. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, rose 6 basis points to 7.32 percent.
Last month’s current-account surplus — the broadest measure of South Korea’s trade with the rest of the world, —was the highest since November last year’s record of US$6.91 billion, after exports rose 0.2 percent last month from a year earlier to US$47.4 billion, boosted by brisk sales of information-technology devices and chemical products.
This month’s exports of automobiles and other products may rise 1 percent to 2 percent from a year earlier as exporters’ competitiveness is undermined by a weak Japanese currency, the South Korean finance ministry said in a statement on Sunday. The government estimates that a 10 percent gain in the won versus the yen will result in South Korea’s exports dropping 1.9 percent from a year earlier in the following quarter.
The won has climbed 8.3 percent against the yen this year and weakened 3.9 percent versus the US dollar, data compiled by Bloomberg show. The yen has declined more than 11 percent against the greenback in the same period.
South Korea, Asia’s fourth-largest economy, is expected to post a current account surplus of US$33 billion for the whole of this year, down from a record high of US$43.1 billion last year, according to the central bank.