SEOUL: The won declined the most among Asian currencies as global funds sold South Korean stocks after a jobs report supported bets the U.S. will increase interest rates next week for the first time in almost a decade.
Overseas investors were net sellers of local shares for a fourth day following data on Friday that showed American employers added more jobs in November than forecast in a Bloomberg survey. The Federal Reserve’s near-zero benchmark borrowing costs have supported demand for emerging-market assets, and futures contracts show a 78 percent probability of an increase at its Dec. 15-16 meeting. South Korea’s central bank will hold borrowing costs at a record low of 1.5 percent for a sixth month when it meets on Thursday, according to all economists surveyed by Bloomberg.
The won weakened 1 percent, its biggest drop since Nov. 9, to close at 1,168.06 a dollar in Seoul, data compiled by Bloomberg show. The currency fell 0.3 percent last week and has declined 5.9 percent this year. Global investors have pulled almost $2.3 billion from South Korean stocks this quarter, according to exchange data.
“The expected divergence in the monetary policy outlook will fuel outflows from Korean equities,” said Dong-Wook Kim, a currency trader at Kookmin Bank in Seoul, who expects the currency will trade between 1,155 and 1,175 this week. “While dollar-selling by exporters my limit the won’s decline, overall factors support a stronger greenback.”
