SEOUL: South Korea’s won traded near a two-month low as traders await signals from the Bank of Korea on next year’s monetary policy outlook amid the prospect of higher U.S. interest rates.
Financial regulators met Wednesday to review markets before a Federal Reserve policy meeting next week, at which futures contracts show a 80 percent probability of an increase in borrowing costs. The BOK reports household lending for November at 12 p.m. in Seoul. Such debt climbed to an unprecedented level in October and is being monitored by the authority. South Korea’s central bank will keep its benchmark rate at a record low of 1.5 percent for a sixth month on Thursday, according to all 17 economists surveyed by Bloomberg.
The won was little changed at 1,178.53 a dollar as of 10:17 a.m. in Seoul, data compiled by Bloomberg show. The currency fell to 1,184 earlier, the weakest since Oct. 2, and has declined 6.7 percent this year. The dollar’s 14-day relative strength index versus the won was at 63.1 on Tuesday, compared with the 70 level that signals the greenback may have climbed too fast, too soon.
“We’re watching for cues from the authorities as some traders think the won’s drop has been too steep, even though the overall sentiment still supports a strong dollar,” said Kim Dae Hun, a currency trader at Busan Bank in Seoul. “The main focus is on foreigners selling local stocks until the Fed meeting.”
Overseas investors sold more local shares than they bought for a sixth day, taking net sales this quarter to more than $2.4 billion. South Korea’s total household debt rose to a record 1,166 trillion won ($990 billion) at the end of the third quarter.
Five-year government bonds rose, with the yield falling two basis points to 1.93 percent, Korea Exchange prices show.
