Korea Won Drops, Nearing 4-Year Low, as Riskier Markets Shunned

By Kim Kyoungwha and Judy Chen

Sept. 24 (Bloomberg) -- South Korea's won fell, approaching a four-year low, on speculation turbulence in global financial markets will prompt overseas investors to cut holdings of emerging-market assets and repatriate funds.

Policy makers may intervene to support the local currency, Asia's worst performer this year, according to Jay Won, a currency dealer with Korea Exchange Bank in Seoul. Finance Minister Kang Man Soo said today the level of the won should reflect ``economic fundamentals.''

``The local currency market remains unstable given a shortage of dollars,'' said Won. ``Traders are cautious about the intervention that may emerge to check the won's slide.''


The won fell 0.4 percent to 1,152.45 against the dollar as of 9:37 a.m. in Seoul, according to Seoul Money Brokerage Services Ltd. It's slumped 19 percent this year and reached 1,166.20 per dollar on Sept. 16, the weakest since 2004.

Central banks intervene in the currency markets by either selling or buying foreign exchange. South Korea's currency reserves fell to $243 billion by the end of August, from a record $264 billion at the start of the second quarter, as the central bank tried to arrest the won's slide. The local currency fell 14 percent versus the dollar in that time.

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