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Won rises from two-year low as dollar flounders on retail sales
[SEOUL] South Korea's won rose from a two-year low as a technical indicator of trading patterns signaled Tuesday's biggest rally in the dollar in a month was overdone after US retail sales unexpectedly contracted.
Investors will be focused on Chinese data due Wednesday to assess the health of the world's second-biggest economy and the number one buyer of South Korea's exports ahead of the US China's growth slowed to 6.8 per cent last quarter, the least since 2009, according to the median estimate in a Bloomberg survey before figures including retail sales and factory output are issued later.
The won climbed 0.2 per cent to 1,140.30 a dollar as of 10.30 am in Seoul, data compiled by Bloomberg show. The currency earlier dropped to 1,146.64, the lowest level since July 2013. Government bonds were steady, with the three-year yield at 1.81 per cent and the 10 year at 2.5 per cent, according to Korea Exchange prices.
"The won's steep drop yesterday can't continue if the dollar pauses," said Kim Dae Hun, a currency dealer at Busan Bank in Seoul. "Depending on how Chinese data look, the won can be temporarily hit due to concern for China's economic slowdown and Korea's economic dependency." The Bloomberg US Dollar Spot Index, which tracks the currency against 10 major counterparts, was little changed after falling 0.2 per cent on Tuesday. Federal Reserve Chair Janet Yellen testifies before Congress on Wednesday, when she may give a clearer picture as to when the US will raise interest rates this year.
South Korea's jobless rate was unchanged at 3.9 per cent in June, Statistics Korea reported Wednesday. The median estimate in a Bloomberg survey was for a 4 per cent rate.