Korean Won Set for Weekly Gain on Speculation Government Bought

By Judy Chen

July 25 (Bloomberg) -- South Korea's won headed for a weekly advance on speculation the government bought the currency to help contain inflation.

The won gained 1 percent this week, the second-best performer of Asian currencies outside of Japan, after Vice Finance Minister Kim Dong Soo said yesterday that the government will closely monitor for ``herd behavior'' in the market. The won also rose after a central bank report showed the economy maintained its growth in the second quarter as exports rose.

``Market players are worried about strong interventions,'' said Jeff Kim, a currency dealer at Korea Exchange Bank in Seoul. ``The government is keen to keep the won stable.''

The currency climbed 0.6 percent this week to 1,007.4 per dollar at 9:22 a.m. in Seoul, from 1,013.85 last week, according to Seoul Money Brokerage Services Ltd. The won has gained 3.8 percent so far this month, the best performer among 16 most active major currencies. It was little changed today.

Finance Minister Kang Man Soo said today it's too early to be relaxed about a recent decline in oil prices.

The economy grew 0.8 percent from the previous quarter, the central bank said in Seoul today. From a year earlier, gross domestic product increased 4.8 percent, after a 5.8 percent gain in the first quarter.

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