Korea’s market interest rates are likely to trend higher in January due to a rise in US Treasury sales, a report said on Dec. 29.
The yield on Korea’s three-year government bonds is projected to continue its uptrend next month due to overseas factors, ranging from 2 percent to 2.3 percent, according to the report by the Woori Finance Research Institute.
Currently, the return on three-year government bonds hovers around 2.1 percent.
The report said January’s upturn will likely result from America‘s increased sales of government debt rather than expectations for further rate hikes in Korea.
In late November, the Bank of Korea raised its key rate by a quarter percentage point to 1.5 percent, but it is expected to take a while for it to conduct another raise.
Another negative factor is the possibility that the rate-setting Federal Open Market Committee may have more hawkish members next year, when four, including the Fed chair, are slated to step down, according to market sources.
The institute, meanwhile, predicted the Korean won to appreciate against the US dollar in January amid brisk exports and an inflow of investment funds into emerging markets.
By Alex Lee and newswires (email@example.com