Korea Won Ends 4-Day Gain as Exports Fall; Bonds Little Changed

By Kim Kyoungwha

Dec. 1 (Bloomberg) -- South Korea’s won fell, snapping a four-day gain, after a government report showed exports shrank the most in seven years last month. Bonds were little changed

The won extended its losses this year to 37 percent, the worst performer of the 10 most-traded Asian currencies outside Japan, as investors fled emerging markets due to slower global growth. Exports, which make up more than half of Korea’s economy, declined 18.3 percent in November from a year earlier, after growing 8.5 percent the previous month.

“The gloomy export number is having a negative psychological impact on the won,” said Jay Won, a currency dealer at Korea Exchange Bank in Seoul. “Still, losses will be limited as there’s caution against intervention around the 1,500 level.”

Korea’s won fell 0.4 percent to 1,475.25 per dollar as of 10:25 a.m. local time, according to Seoul Money Brokerage Services Ltd. The currency has declined for the past four months.

South Korea’s export growth may be less than 10 percent in 2009, the Maeil Business Newspaper reported Nov. 28, citing Knowledge Economy Minister Lee Youn Ho. The ministry said in November that the government is targeting exports to expand 15 percent next year.

Goldman Sachs Group Inc. last week cut its 2009 economic- growth forecast for South Korea to 1.8 percent from a previous prediction of 3.1 percent, citing faltering local and overseas demand. The change came after Macquarie Securities Ltd. forecast the economy will contract 2 percent next year and UBS AG said it will shrink 3 percent.

Bonds were little changed before the government sells 1.2 trillion won ($814 million) of three-year notes today. The finance ministry will announce the result of the auction at 11:30 a.m. local time.

The yield on the 5.5 percent bond due June 2011 rose 1 basis point to 4.87 percent, according to the Korea Securities Dealers Association. The price fell 0.018, or 2 won per 10,000 won face amount, to 104.092. A basis point equals 0.01 percentage point.

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