Korean Won Weakens for Fourth Day as Global Funds Dump Shares

By Judy Chen

Aug. 26 (Bloomberg) -- South Korea's won weakened for a fourth day on speculation global fund managers will repatriate money after dumping the nation's equities.

The won dropped to its lowest since November 2004 against the U.S. dollar, falling 7.4 percent since Finance Minister Kang Man Soo told lawmakers on July 28 the country faces difficult times. Fund managers outside the nation sold more local shares than they bought for a sixth straight day as the benchmark Kospi stock index extended its slump this year to 22 percent.

``The trend will continue due to offshore players' heavy buying of the dollar,'' said Sam Hong, a Seoul-based currency trader at Shinhan Bank, a unit of South Korea's second-biggest financial group. ``The government's selling of the dollar this month isn't enough to support the currency.''

Korea's currency dropped 0.7 percent to 1086.1 against the dollar, as of 9:51 a.m. in Seoul, according to Seoul Money Brokerage Services Ltd. It has dropped every day this month except for two.

South Korea's consumer-price inflation may exceed 7 percent in August, Seoul Economic Daily reported yesterday, citing a government official it didn't identify. Consumer prices climbed 5.9 percent in July from a year earlier, the fastest pace in almost 10 years.

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