The won dropped after the yen’s decline sparked concerns South Korea may take action to weaken its currency to protect exports. Government bonds gained.
The yen fell to its lowest level versus the dollar since May 2010 amid speculation Japanese Prime Minister Shinzo Abe is preparing to nominate Asian Development Bank President Haruhiko Kuroda as Bank of Japan (8301) governor. Kuroda said Feb. 11 the central bank has “really substantial room” for monetary easing, signaling he may embrace stronger stimulus that would further weaken the currency. Foreign investors sold South Korean shares, snapping a five-day run of net purchases.
“There are lingering concerns the authorities could take steps for the won to help exporters,” said Jeon Seung Ji, analyst at Samsung Futures Inc. in Seoul. “Foreign investors’ net sales are fanning the won weakness, while exporters may want to sell dollars and may limit further declines.”
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