South Korea’s won fell for the first time in six days, retreating from a four-month high, after the Federal Reserve refrained from committing itself to additional stimulus at a policy meeting yesterday.
The Federal Open Market Committee said it will provide additional accommodation as needed, without signaling imminent plans for a third round of asset purchases. European Central Bank policy makers meet today to discuss ways to tackle the region’s debt crisis. South Korea’s foreign-exchange reserves rose by $1.97 billion to $314.35 billion in July, a three-month high, central bank figures showed today.
“The won gained recently as investors expected stimulus policies to be announced at the Fed meeting, but there will be some selling today out of disappointment,” said Lee Jin Ill, a Seoul-based currency dealer for Hana Bank. “Expectations for the ECB are still alive though, which may limit the won’s losses.”
The won weakened 0.4 percent to 1,131.60 per dollar as of 9:25 a.m. in Seoul, after advancing 2.2 percent in the last five trading days, according to data compiled by Bloomberg. The currency touched 1,125.20 yesterday, the strongest level since April 3. One-month implied volatility, a measure of exchange- rate swings used to price options, fell 16 basis points to 7.94 percent.
The yield on South Korea’s 3.25 percent notes due June 2015 slid two basis points, or 0.02 percentage point, to 2.81 percent, Korea Exchange Inc. prices show. Three-year debt futures rose 0.11 to 106.11 and the one-year interest-rate swap fell one basis point to 2.82 percent. -By Jiyeun Lee