Korean Won Declines to Lowest Level in Decade on Stock Selling

By Judy Chen

Oct. 28 (Bloomberg) -- South Korea's won declined to the lowest level in more than a decade on speculation that foreign investors will dump local stocks as the global financial crisis threatens to wreck the country's economic expansion.

The won dropped for a sixth day, extending its loss this year to 37 percent, the second worst performer among the world's 16 most-active currencies. The Kospi stock index fell 3.3 percent today. Overseas fund managers sold more Korean shares than they bought for a 10th straight day, according to data from the stock exchange.

``Dealers are watching the Kospi,'' said Jeff Kim, a currency dealer at Korea Exchange Bank in Seoul. ``Foreign investors' stock selling has absolutely added pressure onto the won.''

Korea's currency slid 3.3 percent to 1,489 against the dollar, the weakest since April 1998, before trading at 1,477.5 as of 9:26 a.m. in Seoul, according to Seoul Money Brokerage Services Ltd.

The Bank of Korea unexpectedly cut the benchmark rate by 75 basis points to 4.25 percent at an emergency board meeting yesterday.

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