Won Snaps Two-Day Drop as Manufacturing Improves; Bonds Decline – Bloomberg

The won snapped a two-day decline
after South Korea’s factory output rose more than analysts had
forecast, easing concerns that economic growth is faltering.
Government bonds fell, pushing yields to a three-month high.

Industrial production climbed 0.8 percent in April from
March, Statistics Korea said today, the first increase this
year. The median estimate in Bloomberg News survey was for a 0.5
percent gain. An index of manufacturers’ confidence jumped to
the highest level in a year, the Bank of Korea said today. The
government cut its forecast for 2013 gross domestic product on
March 29 to 2.3 percent from 3 percent.

“The industrial production data boosted the won,” said
Son Eun Jeong, an analyst at Woori Futures Co. in Seoul.
“Exporters repatriating overseas income may also support the
currency.”

The won rose 0.4 percent to 1,128.85 per dollar as of 11:23
a.m. in Seoul, according to data compiled by Bloomberg. The
currency rebounded after touching 1,133.72 yesterday, the lowest
level since April 11. One-month implied volatility, a measure of
expected moves in the exchange rate used to price options,
declined 32 basis points, or 0.32 percentage point, to 9.38
percent.

An index measuring South Korean manufacturers’ expectations
for June increased to 82 from 81 for May, the central bank said
in a statement. A measure of expectations at non-manufacturing
companies fell to 69 from 72. A reading below 100 indicates that
pessimists outnumber optimists.

The yield on South Korea’s 2.75 percent government bonds
due March 2018 rose one basis point to 2.86 percent, prices from
Korea Exchange Inc. show. That’s the highest level for a five-year note since Feb. 14, data compiled by Bloomberg show.

To contact the reporter on this story:
Yewon Kang in Seoul at
ykang51@bloomberg.net

To contact the editor responsible for this story:
Amit Prakash at
aprakash1@bloomberg.net