South Korea’s won retreated from a six-month high and government bonds gained after data showing an 11th straight monthly decline in producer prices raised concern that the economy lacks momentum.
The Federal Open Market Committee, which is meeting today and tomorrow, may take a decision on whether to cut the stimulus that drove funds to emerging markets. South Korea’s Producer Price Index fell 1.3 percent in August from a year earlier, compared with a 1 percent drop in July, Bank of Korea reported today. The monetary authority kept the seven-day repurchase rate at 2.5 percent for a fourth straight month on Sept. 12.
The won declined 0.3 percent to 1,085.25 per dollar as of 10:11 a.m. in Seoul, according to data compiled by Bloomberg. The currency reached 1,081.11 yesterday, the strongest since February. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, rose three basis points, or 0.03 percentage point, to 7.12 percent.
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