South Korean Won Falls to Near 11-Year Low

By Kelly Olsen

Seoul, South Korea -- South Korea's currency fell to almost an 11-year low Friday amid renewed concerns the country could face a foreign exchange crisis set off by the global credit crunch.

The won declined to 1,506.50 to the dollar, closing down for a fifth straight session and finishing at its lowest since Nov. 24 and just shy of the 1,521 it closed at on March 13, 1998.

Stocks also fell, with the benchmark Korea Composite Stock Price Index declining 3.7% to 1,065.95.

"There is growing concern on Korea's economy and Korean financial markets," said Kim Joong-hyun, a strategist at Goodmorning Shinhan Securities in Seoul.

The won plummeted nearly 26% last year as foreign investors sold South Korean stocks at a record pace. The currency has fallen 16.4% so far this year.

Helping drive the won lower this month have been fears centered on a so-called "March crisis" in which maturing overseas debt owed by South Korean banks would cause the financial system to cave in.

The government says such worries are unfounded.

It cites the amount of the debt coming due in February and March -- $10.4 billion -- compared with the government's foreign reserves -- $201.74 billion -- as well as currency swap agreements with the Federal Reserve and other central banks.

The won, hard hit during the 1997-98 Asian financial crisis, has been prone to such concerns even though a largely media-fueled "September crisis" scenario, based on maturing government bonds held by foreign investors, failed to play out.