ID :
23048
Tue, 10/07/2008 - 10:15
Auther :
Shortlink :
http://m.oananews.org//node/23048
The shortlink copeid
LEAD) S. Korea's regulator downplays possible financial crisis
(ATTN: UPDATES with more quotes and background throughout)
SEOUL, Oct. 7 (Yonhap) -- South Korea's financial watchdog brushed off growing concerns on Tuesday that the country may face a similar financial crisis to the one it underwent in 1997-98.
"Global financial markets are in trouble and there is some talk about a
possibility of another financial crisis, but the current financial situation in
South Korea is different from that of the United States and Europe," Rhee
Chang-yong, vice president of the Financial Services Commission (FSC), said in a
meeting with local analysts.
"Local banks can withstand the current foreign currency liquidity situation even
if they cannot raise funds for at least three months. Unlike in 1997-98, South
Korean banks can secure short-term funds," Rhee said.
His remarks come as South Korea's currency market suffers from a dollar shortage,
with banks and companies rushing to the safer greenback on concerns over a
financial crisis sparked by the collapse of investment bank Lehman Brothers
Holdings Inc.
The South Korean currency tumbled to an over 6-year low against the U.S. dollar
Monday on concerns that local banks and other companies may suffer funding
shortages caused by a global financial rout. On the same day, the country's key
stock index, KOSPI, plunged 4.29 percent to 1,358.75 on massive sell-offs by
foreign and institutional investors.
The local currency was trading at 1,336.25 won as of 9:44 a.m., down 67.25 won
from Monday's close. The KOSPI fell 1.6 percent to 1,337.02 as of 9:44 a.m.
Meanwhile, the government repeated its pledges to use the country's foreign
exchange reserves as a way to provide liquidity.
"The foreign reserves are the safest assets to liquidate immediately," said Shin
Je-yoon, deputy finance minister for international affairs, shrugging off market
concerns about the availability of the reserve.
South Koreans carry unpleasant memories of the 1997 Asian financial crisis. The
country had to receive a US$57 billion bailout from the International Monetary
Fund as foreign investors pulled their money out of Korean assets, causing
exchange reserves to dip to a mere $8.87 billion.
According to South Korea's central bank, the country's foreign exchange reserves
are the world's sixth-largest with $239.7 billion as of the end of September --
down $3.53 billion from a month earlier, and having marked a decline for the
sixth straight month. A fall in foreign reserves came mainly as foreign exchange
authorities unloaded part of their dollar holdings to prop up the weakening local
currency in a move to fight inflation.
Rhee added that there are no concerns about local banks' financial soundness, and
the loan-to-deposit ratios of local lenders remain at a stable level.
The watchdog said it will unveil measures to calm the local stock markets in the
near term.
sooyeon@yna.co.kr
(END)
SEOUL, Oct. 7 (Yonhap) -- South Korea's financial watchdog brushed off growing concerns on Tuesday that the country may face a similar financial crisis to the one it underwent in 1997-98.
"Global financial markets are in trouble and there is some talk about a
possibility of another financial crisis, but the current financial situation in
South Korea is different from that of the United States and Europe," Rhee
Chang-yong, vice president of the Financial Services Commission (FSC), said in a
meeting with local analysts.
"Local banks can withstand the current foreign currency liquidity situation even
if they cannot raise funds for at least three months. Unlike in 1997-98, South
Korean banks can secure short-term funds," Rhee said.
His remarks come as South Korea's currency market suffers from a dollar shortage,
with banks and companies rushing to the safer greenback on concerns over a
financial crisis sparked by the collapse of investment bank Lehman Brothers
Holdings Inc.
The South Korean currency tumbled to an over 6-year low against the U.S. dollar
Monday on concerns that local banks and other companies may suffer funding
shortages caused by a global financial rout. On the same day, the country's key
stock index, KOSPI, plunged 4.29 percent to 1,358.75 on massive sell-offs by
foreign and institutional investors.
The local currency was trading at 1,336.25 won as of 9:44 a.m., down 67.25 won
from Monday's close. The KOSPI fell 1.6 percent to 1,337.02 as of 9:44 a.m.
Meanwhile, the government repeated its pledges to use the country's foreign
exchange reserves as a way to provide liquidity.
"The foreign reserves are the safest assets to liquidate immediately," said Shin
Je-yoon, deputy finance minister for international affairs, shrugging off market
concerns about the availability of the reserve.
South Koreans carry unpleasant memories of the 1997 Asian financial crisis. The
country had to receive a US$57 billion bailout from the International Monetary
Fund as foreign investors pulled their money out of Korean assets, causing
exchange reserves to dip to a mere $8.87 billion.
According to South Korea's central bank, the country's foreign exchange reserves
are the world's sixth-largest with $239.7 billion as of the end of September --
down $3.53 billion from a month earlier, and having marked a decline for the
sixth straight month. A fall in foreign reserves came mainly as foreign exchange
authorities unloaded part of their dollar holdings to prop up the weakening local
currency in a move to fight inflation.
Rhee added that there are no concerns about local banks' financial soundness, and
the loan-to-deposit ratios of local lenders remain at a stable level.
The watchdog said it will unveil measures to calm the local stock markets in the
near term.
sooyeon@yna.co.kr
(END)
