Korean Won Set for 3rd Quarterly Loss on Oil Costs, Stock Loss

By Kim Kyoungwha

June 30 (Bloomberg) -- South Korea's won fell, heading for a third quarterly decline, as soaring oil prices and falling stocks prompted overseas investors to shun the nation's assets.

The currency declined 5 percent this quarter as oil prices above $140 a barrel curbed domestic spending and stoked inflation, dimming the prospects for economic growth. Manufacturers' confidence fell to the lowest level in three years, a central-bank report showed today. Global funds sold more shares than they bought every day this month except two.

``With losses on Wall Street and rising oil prices, the won is doomed to take another hit from offshore players,'' said Ko Yun Jin, a currency dealer with Kookmin Bank in Seoul.

South Korea's currency declined 0.7 percent to 1,043.65 against the dollar as of 9:34 a.m. local time, according to Seoul Money Brokerage Services Ltd. The won has fallen 10.3 percent this year, the second-worst performer of the 10 most- active currencies in Asia outside Japan.

Exporter demand and government intervention may help limit any sharp loss in the Korean currency, Ko said.

Finance minister Kang Mang Soo said on June 25 that the government will focus on stabilizing consumer prices. Inflation last month will probably accelerate more than 5 percent for the first time since 1998, according to a Bloomberg News survey.

Central banks intervene in currency markets by arranging purchases or sales of foreign exchange.

To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net.