Won falls against dollar

The won turned lower against the dollar on Friday, pressured by dollar demand from importers for settlements and linked to South Korean companies dividend payments to foreign stakeholders. But the currency posted a fifth week of gains, hitting a three-month high, on growing hopes that Asias fourth-largest economy is bottoming out.
The currency was expected to trade in a range between 1,300 and 1,350 per dollar for the time being, analysts said. A rising appetite for the countrys assets on signs of an economic recovery and improving foreign currency liquidity were likely to offset dollar demand linked to dividend payments, they said.
South Korean companies usually pay dividends to their shareholders, including foreigners, in March and April, and the won comes under pressure when foreigners repatriate the proceeds to their home countries. The won was quoted at 1,328.0/30.0 per dollar as, 0.4 percent lower than Thursdays domestic close of 1,322.5.
It strengthened to as firm as 1,295.9, the strongest since January 7 as data showed the economy averted a recession in the first quarter. It rose 0.9 percent for the week, posting its fifth week of gains, the longest weekly winning streak since September 2007.
Earlier, central bank data showed the economy was estimated to have expanded by a seasonally adjusted 0.2 percent in the quarter to March from the fourth quarter of 2008, when gross domestic product shrank by a revised 5.1 percent over the earlier quarter.
But the Bank of Korea said in its first official revised forecasts that the export-dependent economy would contract by 2.4 percent for the entire year, which would mark the first annual decline since a 6.9 percent fall in 1998.
"Improvements in the economy and foreign currency liquidity conditions are expected to keep supporting the won. But it is not ready yet to strengthen past 1,300 (per dollar), given remaining uncertainties surrounding the global economy," said June Park, an economist at Woori Investment & Securities. Seoul shares ended up 1.50 percent as foreign investors bought a net 406.8 billion won worth of stocks on the countrys main exchange.