By Kim Kyoungwha
Jan. 30 (Bloomberg) -- South Korea’s won fell for a second day on speculation tighter global credit markets and sliding exports will curb the supply of dollars needed to meet payments on imports and foreign debt.
The currency has dropped 9 percent this month, its worst start to a year since at least 1991, as the economy heads for its first recession in a decade. Bank of Korea Governor Lee Seong Tae said today the bank may use “more active measures” to improve the flow of funds and ease the credit crunch.
“There’s a general feeling that demand for dollars is outweighing supplies given concern that January may see a trade deficit,” said Jeff Kim, a currency dealer with Korea Exchange Bank in Seoul. “The decline in stocks is also unnerving currency players.”
The won fell 0.3 percent to 1,382.70 per dollar as of 9:41 a.m. in Seoul, according to Seoul Money Brokerage Services Ltd. The Kospi stock index fell 0.9 percent, ending a two-day advance.
South Korea posted a current-account shortfall of $6.41 billion in 2008, the first deficit in 11 years, as higher oil prices and the weaker won drove up the cost of imported goods, a central bank report showed today.
The economy shrank 5.6 percent in the last quarter from the previous three months, the biggest contraction since the Asian financial crisis a decade ago, as exports, business investment and consumer spending plunged.
To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net.
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