South Korea’s Won Gains as Geopolitical Tensions in Ukraine Ease

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South Korea’s Won Gains as Geopolitical Tensions in Ukraine EaseSouth Korea’s won touched its strongest level this month as geopolitical tensions in Ukraine waned, fuelling demand for the risky emerging-market assets.

The won accelerated 0.4 percent to trade at 1,026.60 per dollar in Seoul close. The currency had earlier surged to 1,026.05, its highest level since July 31. The won’s one-month implied volatility, which measures the expected fluctuations in the exchange rate used to assign price to options, tumbled nine basis points to 6.85 percent.

“Market sentiment has shifted to risk-on as geopolitical risks are showing signs of easing, as can be seen in the Kospi gains,” Jeon Seung Ji, a currency analyst at Samsung Futures Inc in Seoul, spoke to Bloomberg News. “Exporters selling the greenback and investors unwinding long dollar positions also contributed to won gains.”

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The local Kospi Index of stocks surged after global funds purchased a net local assets for the first time in 4 days. Russia’s President Vladimir Putin called Ukraine to stop its offensive in the country’s eastern region, which it is trying to wrestle away from separatists. The Red Cross announced that it is planning to send aid to rebel-controlled territories, which have borne the heaviest brunt of the civil war.

The yield on South Korea’s 2.75 percent government bonds that mature in June 2017 surged one basis point or 0.01 percent to 2.52 percent, data obtained from Korea Exchange Inc showed. The yield on the 3.5 percent bonds due in March 2024 rose 0.02 percentage point or two basis points, to 3.06 percent. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Yashu Gola at yashu@forexminute.com