Korea Won Falls on Month-End Import Bills; Bonds Little Changed

By Kim Kyoungwha

Nov. 27 (Bloomberg) -- South Korea’s won fell, ending two days of gains, on speculation importers bought dollars to pay month-end bills. Bonds were little changed.

The won may rebound later in the day once importer deals are completed, said Roh Sang Chil, a foreign-exchange dealer with Kookmin Bank in Seoul. Korea reported a record current-account surplus for October today, signaling an increase of incoming funds that may ease a shortage of dollars.

“There were some scheduled orders for dollars from importers, which is dragging the won down in a market that otherwise would have rallied” because of the surplus, said Roh.

The won fell 0.3 percent to 1,482.65 per dollar as of 10:30 a.m. local time, according to Seoul Money Brokerage Services Ltd. The currency is down 37 percent since the end of June, the worst performance among the 10 most-traded Asian currencies outside of Japan. For November, the won has lost more than 9 percent.

The Bank of Korea reported a current-account surplus of $4.91 billion, following a deficit of $1.35 billion in September. The current account is the broadest measure of trade, tracking goods, services and investment income.

“The surplus is beyond expectations,” said Lee Myung Hoon, a currency dealer with state-run Industrial Bank of Korea in Seoul. “Falling oil prices and less overseas travel mean the trend can be sustained which is a big boost to the won.”

Swap Funds

The central bank will receive $4 billion from the Federal Reserve using a currency-swap line for the first time to provide U.S. dollars to local banks struggling to secure foreign funds.

The money is part of last month’s agreement under which the Fed will provide up to $30 billion, the Bank of Korea said in a statement in Seoul today. The central bank will provide the funds to local lenders in the foreign-exchange swap market on Dec. 2, it said.

Government bonds were little changed. The yield on the benchmark three-year note stood at 4.88 percent, according to Korea Securities Dealers Association.

To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net.