South Korean Won Declines Most in a Week as Funds Sell Stocks

By Kim Kyoungwha

Dec. 2 (Bloomberg) -- South Korea’s won fell the most in a week as overseas investors sold the nation’s stocks after U.S. shares tumbled yesterday on speculation the global economic slump is worsening.

Korea’s currency erased half the gains it made during the past five days as global funds cut their local stock holdings after four days of net purchases, according to Korea Exchange Inc. South Korea’s economy grew less than initially estimated last quarter due to weaker exports and domestic demand, the central bank said today in Seoul.

“The tumble in stocks set a bearish tone for the won,” said Lee Myung Hoon, a currency dealer at Industrial Bank of Korea in Seoul. “Recent foreign buying failed to create a pattern that could lend support to the currency market and they have now turned to net selling.”

The won declined 1.7 percent to 1,465.00 per dollar as of 9:30 a.m. local time, according to Seoul Money Brokerage Services Ltd. The currency has weakened 36 percent this year, the worst performer of the 10 most-traded Asian currencies outside Japan.

The Kospi stock index fell 3.7 percent, losing ground for a second day. Asia’s fourth-largest economy expanded a revised 0.5 percent in the three months to Sept. 30 from the prior quarter, the weakest pace since 2004, the central bank said. Growth for the quarter was estimated to be 0.6 percent on Oct. 24.

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