Sept. 26 (Bloomberg) -- South Korea’s won fell on concern Europe may fail to contain its debt crisis and as traders said authorities scaled back intervention that slowed declines last week. Bonds dropped.
The won sank to near a one-year low, slumping 2.1 percent to 1,192.85 per dollar at 3 p.m. in Seoul, after losing 4.7 percent last week, according to data compiled by Bloomberg. The currency gained 1.1 percent in the final minutes of trading on Sept. 23 after the finance ministry and central bank said they were ready to intervene. It touched 1,196.13 that day, the weakest level since September 2010.
“There were several factors that dragged the won down today, including Europe’s ongoing crisis, the Kospi’s decline, and exporters’ refraining from selling dollars on speculation the won will weaken further,” said Lee Jung Ha, a senior currency dealer at Korea Development Bank in Seoul. “Signs of government intervention were not so obvious today.”
The Kospi Index of local shares fell 2.6 percent as overseas investors sold $215 million more of the nation’s stocks than they bought today, taking net sales this month to more than $2 billion.
German Deputy Finance Minister Joerg Asmussen said a decision on the disbursement of the next tranche of aid to Greece won’t be made when euro-region finance ministers meet on Oct. 3. Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., forecast in an interview on Sept. 24 there will be little to no economic growth in industrial nations in the coming 12 months as Europe’s economy shrinks and the U.S. stagnates.
South Korea’s five-year bonds declined. The yield on the 3.5 percent debt due September 2016 rose four basis points, or 0.04 percentage point, to 3.58 percent, Korea Exchange Inc. prices show.
--Editors: James Regan, Andrew Janes
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