Korean Won Gains, Ends 3-Day Loss, as Global Funds Buy Stocks

By Kim Kyoungwha and Judy Chen

Aug. 6 (Bloomberg) -- South Korea's won rose, snapping a three-day decline, as a gain in local shares driven by falling oil prices helped lure overseas investors to the nation's assets.

The won also climbed from a two-week low on speculation the foreign-exchange authorities will step into the market to help boost the local currency and reduce inflation caused by high import prices. Fund managers outside Korea bought more local shares than they sold for the first time in four days, according to data from the stock exchange.

``With the stock market taking off sharply higher and foreigners turning to net buying, the mood is turning favorable for the won,'' said Jay Won, a currency dealer at Korea Exchange Bank based in Seoul. ``The market seems to be in for a gain in the won.''

The currency rose 0.2 percent to 1,016.35 against the dollar as of 9:26 a.m. local time, according to Seoul Money Brokerage Services Ltd. Today's gains trimmed the won's loss this year to 7.9 percent, the second-worst performer of the 10 most-active regional currencies outside of Japan.

The Kospi stock index jumped 2.2 percent as crude oil declined for a third day, trading below $119 a barrel in New York. Central banks intervene in currency markets by selling or buying foreign exchange.

To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net; Judy Chen in Shanghai at xchen45@bloomberg.net.