South Korea’s Won Climbs After Economy Unexpectedly Expanded

By Kim Kyoungwha

April 24 (Bloomberg) -- South Korea’s won strengthened after the central bank reported an unexpected expansion in Asia’s fourth-largest economy, suggesting a slump may be easing.

The Korean currency’s advance pared this week’s loss against the dollar to 0.6 percent, the first decline since the week ended March 6. Gross domestic product rose 0.1 percent from the fourth quarter, when it shrank 5.1 percent. The median forecast in a Bloomberg survey of seven economists was for a 0.2 percent decline.

“The better-than-expected growth numbers lend a psychological boost to the markets,” said Kim Sung Soon, a currency dealer with Industrial Bank of Korea in Seoul. “The won could build up some momentum.”

The won rose 0.6 percent to 1,340.45 per dollar as of 9:31 a.m. in Seoul, according to data compiled by Bloomberg. Forward contracts show the won will strengthen to 1,321 in a year’s time, compared with 1,360.7 a month ago.

Record interest-rate cuts and the government’s 50 trillion won ($37 billion) in stimulus are starting to bolster Asia’s fourth-largest economy. Export declines eased last quarter as the won’s 30 percent drop against the dollar in the past year helped companies including LG Electronics Inc. and Hyundai Motor Co. weather a slump in global trade.

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