Korean Won Drops to 2011 Low as Japan Radiation Risk Worsens; Bonds Slip

South Korea’s won slumped to its weakest level this year as a worsening crisis at a nuclear power plant in Japan prompted investors to favor safer bets than emerging-market assets.

Foreign governments began evacuating citizens from Tokyo and Korean Air Lines Co. said it would fly two Boeing Co. 747s Tokyo’s Narita airport today as Asiana Airlines Inc. added a flight from the Japanese capital to Seoul. In South Korea, the biggest source of visitors for Japan, about 11,000 customers of Hana Tour Service Inc. canceled trips after the earthquake, said Cho Il Sang, a company spokesman.

“The situation in Japan is getting worse and foreign governments are evacuating their people from Tokyo,” said Thomas Harr, Singapore-based head of Asian foreign-exchange strategy at Standard Chartered Plc. “The developments in Japan are very negative for emerging Asia, especially for Northeast Asia due to the growth impact and economic impact.”

The won slid 0.4 percent to 1,135.13 per dollar at the 3 p.m. close in Seoul, according to data compiled by Bloomberg. It reached 1,144 earlier, the weakest level since Dec. 30.

The U.K. government yesterday urged British nationals living in Tokyo and to the north of the city to consider leaving the area. France is making two government aircraft available to its citizens who want to leave Japan, Le Figaro reported yesterday, citing a statement on the Foreign Affairs Ministry website in an Agence France-Presse report.

The Nikkei 225 (NKY) Stock Average fell 1.4 percent after the head of the U.S. Nuclear Regulatory Commission said yesterday Japan’s Fukushima Dai-Ichi power plant is releasing “extremely high” levels of radiation that could be life-threatening. The yen touched a post-World War II high of 76.36 per dollar on speculation the nation’s insurers and investors will redeem overseas assets to pay for damages.

South Korea’s three-year government bonds declined for the first time in nine days. The yield on the 3 percent note due December 2013 rose nine basis points, or 0.09 percentage point, to 3.67 percent, according to prices from Korea Stock Exchange. Yesterday’s closing level was the lowest in two months. A basis point is 0.01 percentage point.

To contact the reporters on this story: Patricia Lui at plui4@bloomberg.net; Lilian Karunungan in Singapore at lkarunungan@bloomberg.net.

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net.

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