Korean Won Gains for Fifth Day on Signs Global Funds May Return

By Kim Kyoungwha

Dec. 11 (Bloomberg) -- South Korea’s won strengthened for a fifth day against the dollar as stock gains fueled speculation overseas investors are returning to purchase the nation’s assets.

The currency is on course for the biggest weekly advance in six weeks after the People’s Bank of China said yesterday China, South Korea and Japan agreed to meet in 2009, starting regular consultations to ensure currency stability in Asia. The won is down 32 percent this year, Asia’s worst performer among the 10 most-traded regional currencies outside Japan.

“There are some hopes that sentiment for Korea is turning around with foreign investors increasing stock purchases,” said Lee Myung Hoon, a currency dealer with state-run Industrial Bank of Korea in Seoul. “It’s also positive that Korea can expand swaps further with Japan and China.”

The won rose 2.7 percent to 1,357.50 per dollar as of 9:17 a.m. in Seoul, according to Seoul Money Brokerage Services Ltd. Global funds bought more Korean shares than they sold for a fourth day, according to Korea Exchange.

The agreement comes ahead of this week’s summit among leaders of the three nations in Japan to discuss cooperation on overcoming the financial crisis. A slumping won this year has put pressure on President Lee Myung Bak to broker an agreement on pooling some of the region’s $4 trillion in foreign-exchange reserves. Japan’s Prime Minister Taro Aso and China’s Premier Wen Jiabao will meet with Lee in Fukuoka on Dec. 13.

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