Won drops nearly a percent on bleaker economic outlook

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Won drops nearly a percent on bleaker economic outlook

The won fell the most in a month yesterday as slowing services and manufacturing growth in China dampened Korea’s export outlook. Bonds were little changed even as inflation unexpectedly eased in February.

Expansion in industries including retailing, transport and banking in Asia’s largest economy was the slowest in five months in February, an official purchasing managers showed yesterday.

A manufacturing gauge also decreased on March 1. China is the largest destination for Korean goods.

Consumer prices rose 1.4 percent from a year earlier, compared with the median estimate in a Bloomberg survey for a 1.6 percent increase, official figures showed yesterday.

“China data was disappointing,” said Jeon Seung-ji, a Seoul-based currency analyst at Samsung Futures. “The downside may be limited for the won as the market also received carried-over export deals from last month.”

The won fell 0.9 percent from its Feb. 28 close to 1,093.15 per dollar, according to Seoul Money Brokerage Services.

That was the biggest decline since Jan. 28.

Local financial markets were closed on March 1 for a public holiday. The won touched 1,093.75 earlier, the weakest level since Feb. 12.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, rose 13 basis points, or 0.13 percentage point, to 7.2 percent.

Bloomberg

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