ID :
21302
Fri, 09/26/2008 - 09:49
Auther :
Shortlink :
http://m.oananews.org//node/21302
The shortlink copeid
S. Korea ready to inject foreign currency into market
SEOUL, Sept. 25 (Yonhap) -- South Korea will spare no efforts to provide local banks with foreign currency liquidity should they face a shortage due to the current U.S. financial turmoil, Seoul's top economic policymaker said Thursday.
"If the banking sector faces a shortage of foreign currency, the government and
the Bank of Korea will make every effort to solve such a situation," Finance
Minister Kang Man-soo told a meeting with European businessmen.
His remarks come amid fears that domestic banks may face foreign currency
shortages as the U.S. financial rout makes it difficult for them to raise foreign
currency funds in overseas markets.
Noting that the current won-dollar exchange rate is not in line with the
downtrend of the greenback, Kang hinted that the government may intervene if the
local currency fluctuates against the dollar.
"Smoothing operations will be undertaken if and when the value of the won becomes
unstable," the minister said.
The value of the Korean currency against the greenback has been volatile
recently, sparking worries over inflation. So far this year, the won has fallen
roughly 20 percent against the dollar.
In a desperate effort to keep the won from falling against the dollar, foreign
exchange authorities are believed to have intervened intensively in the currency
market over the past two months, unloading an estimated US$10 billion.
A weak won helps boost exports by making South Korean goods cheaper in overseas
markets, but leads to higher prices domestically by pushing up the import bill of
the resource-poor economy.
Kang also said that unlike Korea's financial crisis in 1997, the economy will
face no serious difficulties because of the U.S. financial mess, given its ample
foreign exchange reserves and local companies' low debt ratios.
As of end-August, South Korea's foreign exchange reserves stood at $243 billion,
the sixth-largest in the world and far higher than the $20.4 billion in December
1997 when Seoul had to seek a bailout from the International Monetary Fund.
The minister said he expects South Korea and the European Union (EU) to be able
to conclude a free trade agreement (FTA) within the year, though several issues
remain unresolved.
Seoul and the EU have held seven rounds of negotiations since the conclusion of
an FTA between Seoul and Washington last year, as South Korea tries to gain
greater footing in the 27-nation economic bloc, its second-largest trading
partner after China.
pbr@yna.co.kr
"If the banking sector faces a shortage of foreign currency, the government and
the Bank of Korea will make every effort to solve such a situation," Finance
Minister Kang Man-soo told a meeting with European businessmen.
His remarks come amid fears that domestic banks may face foreign currency
shortages as the U.S. financial rout makes it difficult for them to raise foreign
currency funds in overseas markets.
Noting that the current won-dollar exchange rate is not in line with the
downtrend of the greenback, Kang hinted that the government may intervene if the
local currency fluctuates against the dollar.
"Smoothing operations will be undertaken if and when the value of the won becomes
unstable," the minister said.
The value of the Korean currency against the greenback has been volatile
recently, sparking worries over inflation. So far this year, the won has fallen
roughly 20 percent against the dollar.
In a desperate effort to keep the won from falling against the dollar, foreign
exchange authorities are believed to have intervened intensively in the currency
market over the past two months, unloading an estimated US$10 billion.
A weak won helps boost exports by making South Korean goods cheaper in overseas
markets, but leads to higher prices domestically by pushing up the import bill of
the resource-poor economy.
Kang also said that unlike Korea's financial crisis in 1997, the economy will
face no serious difficulties because of the U.S. financial mess, given its ample
foreign exchange reserves and local companies' low debt ratios.
As of end-August, South Korea's foreign exchange reserves stood at $243 billion,
the sixth-largest in the world and far higher than the $20.4 billion in December
1997 when Seoul had to seek a bailout from the International Monetary Fund.
The minister said he expects South Korea and the European Union (EU) to be able
to conclude a free trade agreement (FTA) within the year, though several issues
remain unresolved.
Seoul and the EU have held seven rounds of negotiations since the conclusion of
an FTA between Seoul and Washington last year, as South Korea tries to gain
greater footing in the 27-nation economic bloc, its second-largest trading
partner after China.
pbr@yna.co.kr
