June 27 (Bloomberg) -- South Korea’s won dropped the most in a month as concern the European debt crisis won’t be contained prompted investors to flee emerging-market assets.
European finance chiefs will decide on July 3 whether Greece has met conditions for its next aid payment. South Korea’s Finance Minister Bahk Jae Wan on June 24 urged contingency planning for potential external shocks to the economy, including from Europe.
“Concerns that Greece’s debt crisis may spread to other European nations including Italy and Portugal is keeping investors from emerging-market assets,” said Byeon Ji Young, a foreign-exchange analyst at Woori Futures Co. in Seoul. “The concerns are weighing on stocks and the currency.”
The won dropped 0.6 percent to 1,085.63 per dollar as of the 3 p.m. close in Seoul, according to data compiled by Bloomberg. Earlier, the won fell 0.9 percent, the biggest decline since May 23. South Korea’s Kospi index of shares slipped 1 percent and foreign investors sold more stocks than they purchased.
The European Central Bank has warned a Greek collapse would cripple the nation’s lenders and hurt banks across the region that are already under pressure to bolster capital. Bank default swaps have surged on speculation a Greek bankruptcy would drag down Portugal, Ireland, Spain and Italy, which have more than 2.7 trillion euros ($3.8 trillion) of bonds outstanding.
The yield on South Korea’s 4 percent bonds due March 2016 was unchanged at 3.96 percent, according to prices from Korea Exchange Inc. The government sold 800 billion won ($737 million) of 20-year bonds at a yield of 4.37 percent, the Ministry of Strategy and Finance said today.
--Editor: Sandy Hendry, Simon Harvey
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