The Korean won receives a boost from data out of China and pushes the currency to a two year high. China is South Korea’s biggest trading partner, and Chinese exports jumped 12.7 percent beating forecasts. South Korean government debt prices fell.
According to the Finance Minister Hyun Oh Seok, the moves in the won will be monitored for potential herd behavior – a tendency for traders to all pile into an asset to profit on the new momentum.
“After China’s better-than-expected export data, investor sentiment is leaning toward risk-on trade,” said Jeon Seung Ji, a currency analyst at Samsung Futures Inc. However, Jeon said that the rise in the won may be limited due to central bank intervention.
Marc Chandler, chief currency strategist at Brown Brothers Harriman & Co., wrote that the won could continue a “slow grind” higher with the Bank of Korea continuing to intervene the foreign-exchange market.
The won traded at 1,052.62 per dollar in early local trade in Seoul. However, the exchange rate fell to 1,051.11 prior, the strongest level against the dollar since 2011. It is possible for the won to test 1,050 per dollar, but the Bank of Korea and the possibility of intervention will be in the back of trader’s minds.