The South Korean 10-year bond prices slumped on Tuesday after Bank of Korea's policy board has played down expectations that the bank would resort to quantitative easing to boost the country's flagging economy. The benchmark 10-year bonds yields climbed 1.99 pct to 1.789 pct and 3-year bonds yield jumped 0.97 pct to 1.454 pct.
In an interview late Monday, Chung Soon-won said that no meaningful discussions about the radical easing policy had taken place at the bank and the Bank of Korea has no preset stance on it.
The Bank of Korea's monetary policy committee meets next week on April 19th to set the 7-day policy interest rate, which has been left unchanged at record-low 1.5 pct after seven rounds of reduction until June last year.
We expect the BOK to cut in April, after holding its benchmark at a record low 1.5 pct for 9-months. This is supported by the increasing speculation in the market that the BOK may cut borrowing costs that are already at a record low, pushing bonds prices up.
The material has been provided by InstaForex Company – www.instaforex.com