South Korea’s won rose to its strongest level in more than a week and government bonds fell after the government reported a bigger-than-expected trade surplus and Europe stepped up efforts to tackle its debt crisis.

South Korea announced yesterday a $2.3 billion trade surplus for March, more than the median forecast of $1.5 billion in a Bloomberg survey of economists. Inflation slowed to a 20- month low of 2.6 percent, less than all 11 estimates in a Bloomberg poll, according to data released today. Euro-area finance ministers decided on March 30 that 500 billion euros ($668 billion) of fresh money would be added to the 300 billion euros previously committed to fight its debt crisis.

“The mood in and out of Korea is positive for the won,” said Byeon Ji Young, a Seoul-based analyst at Woori Futures Co. “The trade surplus for two straight months is supportive for the currency, but gains will be limited as we saw a drop in both exports and imports.”

The won rose 0.5 percent to 1,127.90 per dollar as of 9:43 a.m. in Seoul, after strengthening 1.7 percent in the first quarter, according to data compiled by Bloomberg. It touched 1,127.80 today, the strongest since March 21. One-month implied volatility for the currency, a measure of exchange-rate swings used to price options, slid 13 basis points, or 0.13 percentage point, to 7.98 percent.

South Korea’s exports fell 1.4 percent from a year earlier in March, while imports decreased 1.2 percent, government figures showed yesterday.

Bonds Fall

The yield on South Korea’s 3.25 percent bonds due December 2014 climbed three basis points to 3.58 percent, after declining eight basis points last week, Korea Exchange Inc. prices show. Three-year debt futures dropped 0.09 percentage point to 103.76 and the one-year interest-rate swap advanced one basis point to 3.55 percent.

“Bonds are declining as there isn’t much momentum to extend last week’s technical gains,” said Kim Nam Hyun, a Seoul-based fixed income analyst at Eugene Investment & Futures. “The inflation was slower than expected, but considering last year’s high consumer prices, the figure itself isn’t enough to support bond prices.”

To contact the reporter on this story: Jiyeun Lee in Seoul at jlee1029@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net

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