Korea Won Drops on Concern Swine Flu May Slow Global Recovery

By Kim Kyoungwha

April 28 (Bloomberg) -- South Korea’s won weakened on concern that the spread of swine flu will prolong a global recession, hurting exports and deterring investment in emerging- market assets.

The Korean currency slid for a second day against the dollar after the Ministry of Health, Welfare and Family Affairs said South Korea is testing a patient suspected of having the virus. The World Health Organization raised its global pandemic alert, saying the disease, which has claimed 149 lives so far in Mexico, is no longer containable.

“The swine flu is having a limited impact on markets as we are not aware of how it will pan out and what result it will bring about,” said Oh Suk Tae, an economist with Citigroup Inc. in Seoul. “There’s no momentum building for the currency to move either way for the time being.”

The won fell 0.4 percent to 1,348.50 per dollar as of 9:49 a.m. in Seoul, according to data compiled by Bloomberg. The Kospi stock index advanced 0.8 percent as a central bank report showed consumer confidence is the highest in at least nine months.

Confidence improved this month as shares rallied and the government’s $37 billion stimulus package, coupled with record interest-rate cuts, stoked the economy. The household sentiment index rose to 98, the highest since the Bank of Korea began releasing monthly data, according to a report today.

Forward contracts show the won will strengthen to 1,330.90 in a year, according to data compiled by Bloomberg.

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