S.Korea won turns down on econ fear, risk aversion
Reuters - Saturday, November 15
* Won turns down to post weakest close in over 2 weeks
* Won seen down further on recession, corp default worries
By Cheon Jong-woo
SEOUL, Nov 14 - The South Korean won gave up gains to post its weakest close in over two weeks on Friday as unrelenting worries about the global recession's impact on the export-driven economy had investors back to seeking safer assets.
Market players hope for measures from a weekend G20 meeting in Washington to check a worldwide economic downturn, but they were not so confident for the meeting after fresh evidence of a global recession, analysts said.
Data showed capital spending in China, South Korea's top export market, was slightly lower than expected during October, consistent with weakness seen in a slew of data this week as economies slide into slowdown. [ID:nPEK277443]
The won <KRW=> is expected to fall further, probably to 1,500 per dollar, on persistent fears of a slowdown in Asia's fourth-largest economy and as the threat of corporate defaults in the country looms, analysts said.
The foreign exchange authorities may provide some support to the local currency with dollar-selling intervention, they added.
"The only factor to lift the won is a stabilisation of financial markets, but it looks difficult as we have too many bearish factors. So, everybody takes any kind of bullish factor as a chance to sell the won rather than to buy it," said Jeong My-young, a strategist at Samsung Futures Inc.
The South Korean currency was quoted at 1,399.8/0.1 versus the dollar as of 0600 GMT, compared with Thursday's domestic close <KRW=KFTC> of 1,391.5. Earlier, it gained as much as 1.4 percent to 1,371.8.
Friday's close was the weakest since Oct. 29 and the won lost 5.1 percent against the dollar for the week.
Investors are keeping an eye on Washington where leaders of the Group of 20 countries are due to meet to seek solutions to the world's biggest financial crisis in decades that has hit economic growth around the world.
But some analysts doubt if the meeting will soothe already investors battered by the gloomy economic outlook.
"What fresh measures can they announce? If they fail to stabilise the world's markets, I fear that the won could go to 1,500 next week," said an analyst at a local futures firm, asking not to be identified.
Reflecting the overall grim economic picture, the Organization for Economic Cooperation and Development cut its economic outlook forecast for the United States, Japan and the euro zone, seeing recession for all three. [ID:nLD41617]
South Korean shares <.KS11> also gave up all of an early near-4 percent gain to end slightly lower.
Foreign investors sold a net 140.9 billion won worth of shares in South Korea's main stock market after unloading a combined net 638.7 billion won during the last three consecutive sessions.
Meanwhile, dollar spot trade volume on Friday fell to $2.34 billion, the smallest daily level since Dec. 26, 2005, according to data from Seoul Money Brokerage Services Ltd and Korea Money Broker Corp.
0600 GMT 0320 GMT prev close Won <KRW=> 1,399.8/0.1 1,390.8/2.2 1,391.5 Yen/won <JPYKRW=R> 14.4057/17 14.3185/97 14.5380/04 KOSPI <.KS11> 1,088.26 1,091.79 1,088.44
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