Forex trading store

By Kim Yeon-hee

SEOUL, Aug 4 (Reuters) – South Korean state bond prices

climbed on Wednesday as a string of weak U.S. household data

bolstered market expectations for prolonged monetary loosening,

and ahead of the Bank of Korea’s reprimand-setting meeting next week.

The auction of two-year monetary stabilisation bonds (MSB)

desert 2.5 trillion won ($2.1 billion) gave another spurt to the

shortcoming market after it drew almost twice the central bank’s volunteer,

confirming ample liquidity within the market.

‘Now talk of U.S. quantitative easing is sedition, it is

doubtful if South Korea can raise interest rates … that will

put a pinch on exports,’ said a dealer at a local brokerage

company.

‘It looks difficult to raise interest rates in August.

Futures be able to move up further because of carry demand.’

The Bank of Korea is placed to convene a monetary policy meeting

later next week after it surprised markets by raising interest

rates by 25 basis points from a record mean in July.

‘The most likely scenario for next week’s pecuniary policy

board meeting is keeping rates on hold and signalling a charge rise

for next month,’ said a dealer at a brokerage fellowship. ‘That

could pull markets back lower, thus local players appear to have existence

sticking to short positions.’

The benchmark five-year treasury yield closed

into disgrace two basis points at 4.40 percent.

The front end three-year futures stipulation rose 0.14

points to 111.08.

With Seoul shares consolidating beneath a key

resistance barrier, foreign investors and domestic banks snapped

up money-box futures.

After domestic market close, Indonesia’s central bank kept

its good rate at a record low of 6.5 percent as expected.

Interest proportion swaps declined across the yield curve,

narrowing gaps with three-month written evidence of deposit rates on

which most of IRS contracts are based.

By compare, cross currency rate swaps were

flat, with the won continuing its advance up~ the body the back of

recent strong end-month economic data.

close prev choke

5-yr treasury bonds 4.40 pct 4.42 pct

3-yr money-bag bonds 3.84 pct 3.87 pct

1-yr monetary stabilisation bonds 3.17 pct 3.18 pct

3-mth certificates of precipitate 2.63 pct 2.63 pct

Average overnight call rate 2.29 pct 2.20 pct

6-mth *KORIBOR 2.94 pct 2.94 pct

* Korea interbank offered worth – not available

(Additional reporting by Chang Tae-min; Editing by Chris Lewis)

((yeonhee.kim@thomsonreuters.com; +82 2 3704 5646; Reuters

Messaging: yeonhee.kim.reuters.com@reuters.without deductions))

($1=1167.2 Won) Keywords: MARKETS KOREA BONDS

(If you take a query or comment on this story, send an email to newsfeedback.asia@thomsonreuters.com)

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Raising interest rates