Korean Won Falls as Stocks Drop on Corporate Earnings Outlook

By Kim Kyoungwha

Nov. 11 (Bloomberg) -- South Korea's won weakened, halting a two-day gain, as regional stocks declined on concern that corporate earnings will be hurt by the global slowdown, cutting demand for emerging-market assets.

Korea's currency has lost 24 percent over the past three months, Asia's worst performer, as credit markets froze and caused a shortage of dollars for banks and companies to service maturing debt. Fitch Ratings lowered its credit ratings outlook for the country to negative from stable yesterday because currency reserves may fall.

``The stock market set the bearish tone for the won today,'' said Roh Sang Chil, a foreign-exchange dealer with Seoul-based Kookmin Bank, Korea's largest lender. ``The currency may be supported near the 1,350 level where exporters are willing to settle their deals.''

The won fell 2 percent to 1,353.75 per dollar at 9:38 a.m. in Seoul, according to Seoul Money Brokerage Services Ltd. The currency has declined 31 percent this year, the most in Asia.

The Kospi index of shares was down 2.7 percent today, ending two days of gains.

Choi Jong Ku, director general at the finance ministry's international bureau, said yesterday that Fitch's outlook downgrade is a reflection of the global economic slowdown.

Investors overseas sold more Korean stocks than they bought today, wiping out yesterday's net purchases, according to the Korea Exchange.

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