South Korea’s won traded near a nine-month high amid speculation the U.S. Federal Reserve will delay trimming its record stimulus that has spurred emerging-market inflows. Government bonds were unchanged.
The first reduction in the Fed’s $85 billion of monthly debt purchases will be pushed back until March after a 16-day government shutdown arising from a budget impasse cut U.S. growth this quarter and interrupted the flow of data, according to a Bloomberg News survey of economists. South Korea is monitoring currency inflows and movements to identify speculative activities and will prevent “herd behavior,” Finance Ministry Director Kim Seong Wook said Oct. 18.
“It is unlikely that the Fed will change its monetary policy stance at least by this year, which may decrease the risk of outflows from emerging markets,” said Hong Seok Chan, a currency analyst at Daishin Economy Research Institute in Seoul. “The pace of the won’s rally may slow as traders are wary of the possible intervention by the authorities.”
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