Korea’s Won Falls for Second Day as Data Show Pickup in Outflows

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The won fell for a second day amid concern foreign investors will pull more money from South Korean assets as economic growth slows.

Global funds reduced holdings of local bonds in July by the most since December 2011 and of equities by the most since June 2013, the Financial Supervisory Service reported Tuesday. The government will prepare detailed measures to stabilize markets if needed in response to risks such as volatility in Chinese stocks and the yuan’s devaluation, Finance Minister Choi Kyung Hwan said at a meeting with officials on Monday.

The won fell 0.2 percent to 1,185.15 a dollar at the close in Seoul, according to data compiled by Bloomberg. The currency has lost 5.9 percent this quarter, the worst performance in Asia after Malaysia’s ringgit. The benchmark share index dropped 0.6 percent, adding to Monday’s 0.8 percent decline.

“Outflows, especially from stocks, are pushing the won down as investors repatriate their money,” said Jeon Seung Ji, a currency analyst at Samsung Futures Inc. in Seoul. “We’ll have to watch foreign flows for some time amid broad weakness in emerging-market currencies.”

Global funds sold more Kospi index shares than they bought for nine straight days through Tuesday, the longest spate of net sales since December.

China’s currency devaluation last week may increase uncertainties about its economy as well as other emerging markets in the short term, Finance Minister Choi said Monday. The Bank of Korea held its key interest rate at a record-low 1.5 percent on Thursday as it assesses the impact of slower economic growth and the yuan’s depreciation.

The nation’s government bonds rose, with both the three-and 10-year yields declining one basis point to 1.72 percent and 2.28 percent, respectively, Korea Exchange prices show.

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