SEOUL: South Korea’s won and government bonds fell as U.S. jobs data fueled speculation the Federal Reserve will raise interest rates as early as June.
Employment in the U.S. registered the biggest three-month increase in 17 years through January and income for the month gained the most since November 2008, official reports showed Friday. The won dropped to the lowest in a week after a report on Sunday showed imports in China, South Korea’s biggest overseas market, fell last month by the most in five years.
The won fell 0.5 percent to 1,094.75 per dollar as of the close in Seoul Monday, according to data compiled by Bloomberg. The currency reached 1,099.49, the lowest since Feb. 3, and has weakened 0.3 percent this year. The Bloomberg Dollar Spot Index, which tracks the greenback’s performance versus 10 major peers, was steady following a 1 percent jump on Friday, the biggest since October.
“Concern that the Fed may raise rates sooner than expected triggers the selling of local bonds and stocks, weakening the won even more,” said Kim Moon Il, a Seoul-based fixed-income analyst at Eugene Investment & Securities Co.
The probability of a Fed rate increase by June, based on trading in futures and options, rose to 26.9 percent on Friday, from 17.6 percent the day before, data compiled by Bloomberg show. The odds of an increase by September were 59.1 percent, up from 44.5 percent. The jump came after the Labor Department reported non-farm payrolls increased by 257,000 jobs in January, taking the gains since November to 1 million.
