Korean Won Set for First Weekly Advance in a Month; Bonds Rise

By Kim Kyoungwha

Nov. 28 (Bloomberg) -- South Korea’s won headed for the first weekly gain in a month on optimism cheaper oil prices and a fall in overseas travel will keep the nation’s current-account in surplus, easing a shortage of dollars. Bonds rose.

The currency rose today as foreign investors bought more Korean shares than they sold for a third consecutive day, the longest streak since the end of October. Finance Minister Kang Mang Soo said the surplus will top more than $1 billion in November and remain positive in 2009.

“The surplus provides a big psychological boost to the currency market,” said Jeff Kim, a foreign-exchange dealer with Korea Exchange Bank in Seoul. “An uncontrollable surge in the dollar isn’t there anymore but month-end import deals are flowing in.”

The won appreciated 2.5 percent this week to 1,458.70 per dollar as of 10:23 a.m. in Seoul, according to Seoul Money Brokerage Services Ltd. The currency fell 11 percent this month, the worst among the world’s 16 most-active currencies.

The central bank yesterday reported a record surplus of $4.91 billion in October after a deficit of $1.35 billion in September. The current account is the broadest measure of trade, tracking goods, services and investment income.

“The current account turning to a surplus provides us a basis to better manage the difficult times,” Finance Minister Kang said at a weekly government meeting in Gwacheon, South Korea, today. “We’re likely to see a November current-account surplus of more than $1 billion and a similar amount next month.”

Bonds Advance

Korean bonds rose for a second week after the government said it will reduce debt sales next month.

The Finance Ministry said after the market closed yesterday that it will sell as much as 3.4 trillion won ($2.3 billion) of bonds in December, less than 5.5 trillion won for November.

The offers include 1.2 trillion won of three-year notes, 1.4 trillion won of five-year bonds, 285 billion won of 10-year securities and 100 billion won of 20-year debt, the ministry said in a statement issued in Gwacheon.

The benchmark three-year note yield fell 15 basis points, or 0.15 percentage point, to 4.85 percent this week, according to Korea Exchange. The price of the 5.5 percent security due in June 2011 rose 0.46, or 46 won per 10,000 won face amount, to 104.13.

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