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Won heads for third year of gains; yuan advances

Won heads for third year of gains; yuan advances

South Korea's won headed for a third year of gains on growing demand for the currency from exporters.
The nation had the largest current account surplus on record in November, driven partly by exports, a Bank of Korea report yesterday showed. The won is the third-best performer against the U.S. dollar among the 15 most-actively traded Asia-Pacific currencies this year, as investors bought the country's bonds because of the yield premium they offer over U.S. Treasuries.
"The current account surplus amid a stronger won is really positive for Korea and of course simply increases demand for the won from exporters," said Osamu Takashima, chief analyst in Tokyo of the global markets sales and trading division at Bank of Tokyo-Mitsubishi UFJ Ltd. "They also have a yield premium, which makes their assets more attractive, supporting the won."
The won advanced 8.6 percent this year to 929.80 against the U.S. dollar as of the 3 p.m. close of onshore trading, according to Seoul Money Brokerage Services Ltd. It may trade between 910 and 950 by the end of March, Takashima said.
China's yuan rose the most in almost a month against the U.S. dollar after Financial News reported People's Bank of China Vice Governor Wu Xiaoling as suggesting the currency will strengthen.
Speculation the Federal Reserve will cut interest rates next year will help the yuan appreciate against the U.S. dollar, the newspaper yesterday quoted Wu as saying. A decline in the U.S. currency would help correct global imbalances, Wu said.
"The yuan needs to strengthen in order to help adjust trade imbalances," said Li Huiyong, an analyst at Shenyin Wanguo Research and Consulting Co. in Shanghai. "The yuan will continue to rise against the U.S. dollar" and may reach 7.50 by the end of next year.
China's currency gained 0.12 percent to 7.8125 against the U.S. dollar.


Updated : 2021-04-14 18:35 GMT+08:00