Korean Won Gains a Second Day as Exporters Repatriate Funds

By Kim Kyoungwha

Jan. 14 (Bloomberg) -- South Korea’s won rose for a second day on speculation exporters are taking advantage of dollar gains to repatriate overseas income.

The Korean currency slid to a one-month low of 1,385.50 against the greenback yesterday after Goldman Sachs Group Inc. forecast the economy, Asia’s fourth largest, will shrink this year. The won fell 26 percent in 2008, Asia’s worst performance, and so far in 2009 has dropped 6.1 percent as a deepening global recession saps demand for emerging-market assets. The Kospi stock index declined for the fourth time in five days.

“There are some offshore dollar sales and exporter settlements after the won dipped below the 1,360 level,” said Jo Hyun Suk, a currency dealer with Korea Exchange Bank in Seoul. “Still, won gains will be limited given still shaky stock movements.”

The won rose 1 percent to 1,340.75 per dollar as of 9:42 a.m. in Seoul, according to Seoul Money Brokerage Services Ltd.

ICE’s Dollar Index which tracks the greenback against the currencies of six major trading partners, yesterday rose 1.5 percent, its biggest gain in more than three weeks. The gauge of dollar strength is up 3.6 percent this month, after climbing 12 percent in the second half of 2008.

Finance Minister Kang Man Soo said the Korean economy faces a “difficult” year in 2009. Goldman yesterday forecast South Korea’s gross domestic product will shrink 1 percent in 2009, revising a November projection for 1.8 percent growth. Nomura International Ltd. and UBS AG also predict the economy will contract.

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