South Korean won touched its highest level since 2008 as the local markets reopened for trading after being shut for two days for public holidays, while the dollar weakened.
The won was up 0.8 percent at 1,022.65 versus the dollar in Friday’s trading in Seoul. It touched an intraday high of 1,022.55, the most since August 2008.
South Korea’s April exports grew 9 percent, exceeding most analysts’ expectations. The Bloomberg Dollar Spot Index, which monitors the U.S. dollar against a basket of 10 major counterparts, hits its weakest level since October on Tuesday owing to weak U.S. labor market.
“With April export figures good, exporters that couldn’t convert proceeds during the holidays will sell dollars today,” Jeon Seung Ji, a currency analyst at Samsung Futures Inc in Seoul, told Bloomberg. “This, combined with the globally weak dollar, will support the won. Still, the authorities will be reluctant to let the won strengthen beyond 1,020 per dollar.”
The U.S. labor participation rate, which tracks the percentage of adults of working age with a job or those actively looking for one, plunged to the weakest level in 36 years. The thin workforce denies the country the workers it needs to bolster its economy.
The won’s one-month implied volatility, which measures the expected shifts in the exchange rate used to assign prices to options, fell 0.3 percentage point, or 30 basis points, from Friday to 5.87 percent.
“Investors were selling dollars as expectations for a weaker won abated and smoothing operation by authorities wasn’t as strong as expected,” explained Kim Do Hee, a currency trader at Australia & New Zealand Banking Group Ltd in Seoul. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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