South Korean bonds gain following President Park’s resignation news

The South Korean government bonds gained Tuesday after President Park Geun-hye agreed to resign before the term ends on February 2018, in an attempt to calm the ongoing protests against her, on corruption scandals.

The 10-year bond yield, which moves inversely to its price, fell 1-1/2 basis points to 2.14 percent, the yield on 20-year note dipped 2 basis points to 2.17 percent and short-term 3-year bonds yield slid 6 basis points to 1.70 percent.

South Korean president Park Geun-hye has asked parliament to come up with a way for her to relinquish power and to deal with all affairs including when she should step down. She said that apologises for causing concern over her shortcomings.

According to BBC news, huge rallies have been held across South Korea for what are thought to be the largest protests so far demanding President Park Geun-hye steps down. Ms Park is accused of allowing her friend, Choi Soon-sil, to manipulate power from behind the scenes. The president has apologised twice, but has so far resisted calls to resign.

Moreover, the Korean bonds have been closely following developments in oil markets because of their impact on inflation expectations, which are well below the Bank of Korea's target. Crude oil prices fell on worries that the OPEC will be able to cut production output cut during a meeting on Wednesday. The International benchmark Brent futures fell 0.50 percent to $4.9 and West Texas Intermediate (WTI) dipped 0.6 percent to $46.7 by 04:40 GMT.

The Organization of the Petroleum Exporting Countries (OPEC) is meeting officially in Vienna on Wednesday to discuss a planned production cut in an effort to curb overproduction that has dogged markets and more than halved prices since 2014, Reuters reported.

With a high degree of uncertainty going into the last 24 hours before the meeting, oil price volatility is expected to be high. There remains disagreement among OPEC-members over which producers should cut by how much, and a plan for non-OPEC oil giant Russia to participate has so far also failed, they added.

Meanwhile, The Korea Composite Stock Price Index (KOSPI) ended flat at 1,978.39 points. Also, USD/JPY fell 0.3 percent to 1,168.69.