Korean Won Rises for Third Day on Speculation Government to Buy

By Judy Chen

July 24 (Bloomberg) -- South Korea's won advanced for a third day on speculation the government will purchase the currency to keep it stable.

The won has gained 2.4 percent versus the dollar in the past month, Asia's best performing currency outside of Japan, paring this year's loss to 7.2 percent. Finance Minister Kang Man Soo said yesterday the government takes steps when necessary to ensure the won trades at a ``fair level.''

``The government has intervened more heavily than last week,'' said Sam Hong, a Seoul-based currency trader at Shinhan Bank, a unit of South Korea's second-biggest financial group. ``It may come out again today.''

The won climbed 0.4 percent to 1,009.35 per dollar at 9:32 a.m. in Seoul, according to Seoul Money Brokerage Services Ltd.

``The government plays a part in making sure the exchange rate reflects supply and demand in the market,'' Kang said at the National Assembly in Seoul when asked about currency intervention. The positive and negative effects of a weaker won will cancel each other out within six months to a year, he said.

A weaker won boosts the value of South Korean companies' overseas sales when converted back into local currency, while also increasing the nation's bill for imported oil and raw materials.

To contact the reporters on this story: Judy Chen in Shanghai at xchen45@bloomberg.net.