South Korea’s Won Advances for Second Day as Local Stocks Climb

By Judy Chen

Jan. 22 (Bloomberg) -- South Korea’s won rose for a second day as stocks advanced on speculation foreign investors will regain their appetite for emerging-market assets.

Asian currencies open for trading climbed against the greenback after the Standard & Poor’s 500 Index rallied 4.4 percent. A central bank report today showed that South Korea’s economy shrank a larger-than-expected 5.6 percent in the fourth quarter, the biggest decline since the Asian financial crisis a decade ago.

“The weak data had already been discounted in the won’s movements,” said Kim Yule, a currency dealer with BNP Paribas in Seoul. “The won’s rise today is driven by the U.S. and the local stock markets.”

The won rose 0.2 percent to 1,370.75 per dollar as of 9:35 a.m. in Seoul, according to Seoul Money Brokerage Services Ltd. It has declined 8.1 percent this month, after a 26 percent slump in 2008, which was the worst year in more than a decade. The benchmark Kospi index gained 1.2 percent.

The economic contraction followed growth of 0.5 percent in the third quarter and was more than twice as much the 2.1 percent decline forecast in a Bloomberg News survey of economists. The economy shrank 3.4 percent from a year earlier, the central bank said in Seoul.

To contact the reporters on this story: Judy Chen in Shanghai at xchen45@bloomberg.net