Korea Won Declines for a Third Day on Record Drop in Exports

By Kim Kyoungwha

Feb. 2 (Bloomberg) -- South Korea’s won dropped for a third day against the dollar as the government reported a record plunge in exports for January, foreshadowing a deepening slump in Asia’s export-driven economies.

The Korean currency shed 8.8 percent last month, its worst start to a year since at least 1991, on speculation tighter global credit markets and falling overseas sales will curb the supply of dollars needed to meet payments on imports and foreign debt. Exports last month slumped 32.8 percent from a year earlier, the most since figures were first compiled in 1957, the Ministry of Knowledge Economy said today.

“The deterioration in exports is far beyond what the markets had expected,” said Oh Suk Tae, an economist with Citigroup Inc in Seoul. “The won remains under the pressure unless exports show a recovery.”

The won fell 0.9 percent to 1,392.10 per dollar as of 10:15 a.m. in Seoul, according to Seoul Money Brokerage Services Ltd. It reached 1,399.10 on Jan. 28, the lowest in seven weeks.

Sliding overseas sales are helping drag South Korea’s economy into what would be its first recession since the Asian financial crisis a decade ago. Industrial production plunged by a record 18.6 percent in December as Hyundai Motor Co., Hynix Semiconductor Inc. and LG Display Co. reduced output to cope with sagging demand.

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