Korean Won Halts Six-Day Decline on Speculation of Intervention

By Kim Kyoungwha

July 22 (Bloomberg) -- South Korea's won was little changed after Vice Finance Minister Kim Dong Soo said the government will take ``reasonable'' steps to help stabilize consumer prices.

The Korean currency snapped a six-day losing streak on speculation the authorities will sell the dollar to help push up the won and lower the cost of imports. Inflation that was at a decade high of 5.5 percent in June remains ``a big concern'' in spite of a drop in oil prices last week, the minister said today in Gwacheon, South Korea.

``Traders are cautious about intervention as the authorities could emerge in the market anytime,'' said Lee Yoon Jin, a currency dealer with state-run Korea Development Bank in Seoul. ``The mood is bullish for the dollar because of demand from foreign investors that have sold local stocks.''

The currency traded at 1,017.40 against the dollar as of 9:36 a.m. in Seoul from 1,018.00 yesterday, according to Seoul Money Brokerage Services Ltd. The won has declined 8.4 percent this year, the second-worst performance among the 10 most-active currencies in Asia outside of Japan.

Central banks intervene in currency markets by selling or buying foreign exchange.

Overseas investors sold more Korean shares than they bought for a 32nd straight day, the longest selling spree on record, according to Korea Exchange. The Kospi index was down 0.5 percent after the biggest one-day gain in five months yesterday.

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