Korean Won Falls First Time in 3 Days; Foreign Stock Sales Seen

By Judy Chen

Oct. 21 (Bloomberg) -- South Korea's won fell for the first time in three days on speculation that foreign investors will cut holdings of local equities as the economy slows.

The currency extended its loss this year to 29 percent, the worst performer among the 10 most-active currencies in Asia outside of Japan. South Korea's economic growth is likely to fall short of 4 percent in the second half of this year and the first half of 2009, Central Bank Governor Lee Seong Tae said today.

``The government's action aims to promote stability, but foreigners' selling of local shares will put pressure on the won,'' said Ko Yun Jin, a currency dealer at Kookmin Bank in Seoul, the country's largest lender.

The won dropped 0.4 percent to 1,319.75 per dollar at 9:37 a.m. in Seoul, according to Seoul Money Brokerage Services Ltd. The currency lost 15 percent in the past month.

Asia's fourth-largest economy is facing the ``most difficult time'' since the 1997-1998 Asian financial crisis and the central bank will adjust rates according to conditions, Lee told lawmakers during an annual parliamentary testimony in Seoul.

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