Korean Won Retreats as Global Stocks Slide Curbs Risk Appetite

By Bob Chen

April 8 (Bloomberg) -- South Korea’s won fell for a second day as a retreat in global stocks prompted investors to favor safer bets than emerging-market assets.

U.S. stocks slid yesterday after investors including George Soros predicted equities would slump, after rallying in the last four weeks on optimism a global recession was abating. Foreigners today sold more Korean shares than they bought for a second day, exchange data shows. South Korea is today selling dollar-denominated bonds overseas for the first time since 2006 to support its currency, Asia’s worst performer this year.

“You’d certainly expect the won to ease off a bit in the face of renewed U.S. equity weakness and signs of risk aversion ticking a little higher globally,” said Sean Callow, a currency strategist in Sydney at Westpac Banking Corp., Australia’s biggest lender by market value. “In order to sustain optimism we’d need something more tangible in the real economy.”

The won fell 1 percent to 1,337.55 per dollar as of 9:47 a.m. local time, according to Seoul Money Brokerage Services Ltd. It surged 16 percent in the last four weeks and touched 1,306 on April 6, the strongest level since Jan. 8. The currency may weaken to 1,400 in the next few days, Westpac’s Callow said.

Korea’s Kospi index of shares slid 1.4 percent, its first decline this month, while the MSCI Asia-Pacific Index dropped 1.6 percent. The Standard & Poor’s 500 Index lost 3.2 percent in the last two days.

South Korea is the latest developing nation to tap international credit markets this year as the global economic slump throttles demand for their exports, eroding foreign- exchange reserves. Emerging-market countries including Mexico, Indonesia and Qatar have raised more than $23.5 billion in foreign debt in 2009, according to data compiled by Bloomberg.

To contact the reporters on this story: Bob Chen in Hong Kong at bchen45@bloomberg.net;