South Korea’s won gained to a two-week high after the central bank lowered its benchmark interest rate for the first time since May last year to revive economic growth. Three-year government bonds fell.
The Bank of Korea reduced the seven-day repurchase rate to 2.25 percent from 2.5 percent, as predicted by 14 of 18 analysts surveyed by Bloomberg. Four had forecast no change. The decision wasn’t unanimous and one board member called for a hold, Governor Lee Ju Yeol said at a press briefing in Seoul, adding that the cut will help boost the effect of government stimulus. The BOK said in a statement after the decision that the recovery in domestic demand is “insufficient.”
“The BOK’s cut erased uncertainty in the currency market and investors are taking this as a chance to sell dollars,” said Jude Noh, a Seoul-based chief foreign-exchange trader at Suhyup Bank. “Local exporters may also sell the greenback ahead of tomorrow’s holiday.”