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Influx of doves for BOK board drives Korea yield to six-week low
[SEOUL] South Korea's government bonds rose, pushing the three-year yield to the lowest in almost six weeks, on speculation new board members named by the central bank will favor cutting record-low interest rates.
The four new candidates announced by the Bank of Korea on Monday need to be approved by President Park Geun Hye and will replace policy makers whose terms on the seven-member board end on April 20.
The BOK is scheduled later on Tuesday to release minutes of the meeting this month at which it held the benchmark rate at 1.5 per cent for a ninth month.
"The market regarded the incoming board members as more dovish than outgoing ones," said Moon Hong Cheol, a fixed-income analyst at Dongbu Securities Co in Seoul.
"There are more chances of policy-rate cuts than before."
The yield on three-year notes fell four basis points to 1.45 per cent as of 10.55 am in Seoul, the lowest since Feb 17, Korea Exchange prices show.
The yield on notes maturing in December 2025 fell two basis points to 1.82 per cent.
The won rose for a second day as foreigners resumed buying local shares and as exporters were seen selling dollars to pay month-end bills.
The Kospi index rose, snapping four days of losses.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, halted a six-day winning streak on Monday after data showed US personal spending barely increased in February.
"As we're coming toward month-end, I expect exporters to sell dollars," said Irene Cheung, a foreign-exchange strategist at Australia & New Zealand Banking Group Ltd in Singapore.
"The won is going to be supported by that, coupled with the weakness in the dollar overnight."
The won climbed 0.4 per cent to 1,161.85 a dollar, according to data compiled by Bloomberg. The currency has gained 6.5 per cent in March in Asia's best performance and is up 0.9 per cent in 2016.