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Korea Won Drops, Bonds Gain on Greece Rating Cut, Stock Declines

Feb. 23 (Bloomberg) -- South Korea’s won slid to a one-week low and government bonds gained as a downgrade of Greece’s credit rating and global stock declines deterred risk-taking.

Fitch Ratings lowered Greece’s credit grade by two levels to C from CCC yesterday, saying a default is highly likely in the near term. The Dow Jones Industrial Average declined 0.2 percent yesterday, after the gauge rose above 13,000 for the first time since 2008 the previous day. The Kospi Index of shares fell 1 percent as overseas investors sold more shares than they bought for the first time in a week.

“Stocks failing to recover previous highs and declining shows there is not much momentum to take riskier bets,” said Lee Jin Ill, a Seoul-based senior currency dealer at Hana Bank. “The Greece credit-rating downgrade also worsened investor sentiment, and some players are seeking to take profits following recent gains in the won.”

The won slid 0.3 percent to 1,129.00 per dollar at the close in Seoul, trimming this year’s advance to 2.1 percent, according to data compiled by Bloomberg. It touched 1,130.28, the weakest since Feb. 16.

The yield on South Korea’s 3.25 percent debt due December 2014 dropped three basis points, or 0.03 percentage point, to 3.44 percent, Korea Exchange Inc. prices show. Three-year bond futures rose 0.09 percent to 104.24. The one-year interest-rate swap was steady at 3.50 percent.

To contact the reporter on this story: Jiyeun Lee in Seoul at jlee1029@bloomberg.net

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

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