South Korean Won Little Changed; Investors May Reduce Stock Sales

By Kim Kyoungwha

Dec. 4 (Bloomberg) -- South Korea’s won was little changed after a two-day decline on speculation overseas investors will reduce sales of shares as the Kospi index followed U.S. markets higher.

Korea’s currency gained 0.1 percent after the central bank said yesterday it would help ease a funding shortage by paying local banks a one-time interest payment on reserve deposits and purchase more securities in money-market operations. The Kospi climbed 1.6 percent, the first advance in four days.

“The won’s rebound is a mere reflection of rising stocks,” said Chun Chong Woo, an economist with Standard Chartered First Bank Korea Ltd. in Seoul. “The unrest over dollar funding remains and the won will be under pressure until the problem is solved.”

The won traded at 1,467.55 per dollar as of 9:57 a.m. in Seoul, according to Seoul Money Brokerage Services Ltd. The currency is down 36 percent this year, the worst among the 10 most-traded Asian currencies outside, amid the global economic crisis that spurred an exit from emerging markets.

Bank of Korea will pay interest at 2.3 percent totaling about 500 billion won ($341.2 million), it said after a special meeting of the board yesterday. The money will be paid later this week or early next week.

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