SEOUL: South Korea’s won declined most in 2 weeks as the yen fell after better-than-forecast Chinese data insisted for safe-haven property.
The yen weakened for a third day as China reported 7.4 percent growth for last year versus projections for 7.3 percent. South Korea’s currency tends to move in tandem with Japan’s as the countries compete for exports in international markets. The dollar advanced against most peers as the Bank of Japan begins a two-day policy meeting and speculation mounts that the European Central Bank will expand asset purchases this week.
The won fell 0.6 percent to 1,084.59 a dollar as of 12:55 p.m. in Seoul, prices compiled by Bloomberg show. The currency declined much as 0.7 percent, the most since Jan. 2, to 1,085.35. The yen dropped 0.6 percent versus the greenback to 118.22. Bloomberg Dollar Spot Index rose 0.3 percent.
“The market expected the won to go up after Chinese growth exceeded forecasts, but it was dragged down by the dollar’s strength against the yen,” said Paik Jin Kyu, a Seoul-based currency trader at Nonghyup Bank. “There was dollar buying by local importers as well.”
China announced what was still the slowest pace of annual growth since 1990 after a tightening of margin-lending regulation sparked a $291 billion rout in the country’s equity market yesterday. Asia’s second-largest economy is South Korea’s biggest export market.
Government bonds rose, with the 10-year yield dropping two basis points, or 0.02 percentage point, to 2.37 percent, Korea Exchange prices show. The yields on five- and three-year notes fell one basis point each to 2.12 percent and 2.03 percent, respectively.
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