Korean Won Trades Near Two-Month Low on Dollar Shortage Concern

By Kim Kyoungwha

Feb. 19 (Bloomberg) -- South Korea’s won traded near a two- month low on concern sliding exports and a tighter global credit markets will starve the nation of dollars needed to pay debt.

The currency has plunged 14 percent so far this year, making it the worst performer among the 10 most-traded Asian currencies outside Japan. Korean banks have $24.5 billion of foreign-currency debt maturing in 2009, $10.4 billion of which falls due this month and next, the Bank of Korea said in a report released today in Seoul.

“The markets are still worried that overseas borrowings will become even more difficult as the unrest in global markets shows no signs of abating,” said Park Sang Bae, a currency dealer with Industrial Bank of Korea in Seoul. “Risk aversion is returning as few people want to go for the local currency.”

The won weakened 0.1 percent to 1,469.80 per dollar as of 9:44 a.m. in Seoul, according to Seoul Money Brokerage Services Ltd. The currency earlier touched 1,477.55, its weakest since Dec. 5.

Speculation the central bank will step in to support the won is deterring traders from buying dollars “too aggressively” near the 1,500 level, Park said.

Finance Minister Yoon Jeung Hyun said yesterday the economy is deteriorating and the government’s priority is to stabilize financial markets. The benchmark Kospi stock index has dropped 11 percent this year.

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