Asia’s Worst-Performing Currency Just Fell to an 18-Month Low
(Bloomberg) -- South Korea’s won slipped to its lowest level since September 2017 as foreign investors looking to repatriate dividends boosted demand for dollars.
This currency slid as much as 0.8 percent to 1,144.95 per dollar, before ending the day at 1,144.70. Offshore and onshore traders are long the greenback amid the dividend payments, according to two traders at foreign banks in Seoul.
Monday’s decline -- which deepened this year’s losses for Asia’s worst-performing currency -- comes after overseas investors sold a net $173.8 million of South Korea-listed bonds on April 5, according to Financial Supervisory Service data. That’s the biggest outflow since Jan. 25.
“Investors’ counter-remittance of dividend payments is typically focused in March and April,” said Ha Keon-hyeong, an economist at Shinhan Investment Corp. in Seoul. “The jump in the dollar-won spot due to supply and demand factors has led to some short-covering in the greenback.”
Sentiment toward the won also weakened as Norway’s $1 trillion sovereign wealth fund got the go-ahead from its government to cut bonds from 10 emerging markets in its index, including South Korea, according to Ha.
The won has weakened 2.5 percent against the dollar this year as a decline in exports -- South Korea’s main growth engine -- intensified concerns about the economy’s outlook. Signs of slower expansion have also spurred bets that the Bank of Korea will ease policy, adding to the pressure on the currency.
©2019 Bloomberg L.P.