Korea's Won Weakens Below 1,300 Level for First Time Since 2002

By Kim Kyoungwha

Oct. 7 (Bloomberg) -- South Korea's won slumped, trading at more than 1,300 per dollar for the first time since 2002, on speculation deepening turbulence in global financial markets will prompt investors to steer clear of emerging-market assets.

The currency, Asia's worst performer this year, tumbled as much as 7.5 percent, the most since December 1997 when the nation sought an emergency loan from the International Monetary Fund to meet debt payments. Deputy Finance Minister Shin Je Yoon said today the government will use its currency reserves to provide funds when needed.

``Sentiment is extremely unstable as the crisis seems to be spreading fast,'' said Jay Won, a currency dealer with Korea Exchange Bank in Seoul. ``People are panicking and they only want to hold dollars.''

The won fell 4.6 percent to 1,330.50 per dollar as of 9:14 a.m. in Seoul, according to Seoul Money Brokerage Services Ltd. The currency has dropped 30 percent this year and earlier today touched a low of 1,364.00 per dollar, the weakest since April 2001.

Finance Minister Kang Man Soo yesterday urged banks to sell overseas assets to raise cash they can use to lend to local companies struggling with rising offshore borrowing costs. The government has been providing funds to the won-dollar swap market, he said.

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