Korean Won Drops, Approaches One-Month Low, as Stocks Tumble

By Kim Kyoungwha

Jan. 15 (Bloomberg) -- South Korea’s won fell, approaching the lowest level in a month, as U.S. and local stocks slumped on signs the global slowdown is getting worse.

The currency snapped a two-day gain after Vice Finance Minister Bae Kook Hwan said the nation’s economic growth in 2009 is likely to fall short of central bank and International Monetary Fund predictions. Oversea investors dumped Korean shares today after U.S. retail sales declined more than economists expected, causing the biggest loss in the Standard & Poor’s index since Dec. 1.

“A tumble on Wall Street is unnerving investors globally again, spurring sentiment for a flight to quality,” said Kim Sung Soon, a currency dealer with Industrial Bank of Korea in Seoul. “Demand for dollars is seen intensifying further.”

The won fell 1.5 percent to 1,368 per dollar as of 9:41 a.m. in Seoul, according to Seoul Money Brokerage Services Ltd. The currency lost 7.9 percent this month, the worst among the 10 most-traded Asian currencies outside of Japan.

Korea’s Kospi index of shares dropped 3.9 percent today, the most since Dec. 12.

Gross domestic product growth this year is likely to be less than the 2 percent forecast by Bank of Korea and the IMF,” Bae said in notes for a speech to be delivered to businesses in Seoul today. At a separate gathering, Vice Finance Minister Kim Dong Soo said the economy is being hurt by global financial turmoil.

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