Lee displays confidence in overcoming financial turmoil

SEOUL, Oct. 7 (Yonhap) -- President Lee Myung-bak said on Tuesday that his government has mapped out sufficient countermeasures to help the nation weather the ongoing global financial turmoil.

"Many people in Korea are worried about the worldwide financial shocks. But the
current situation facing the nation is wholly different from the foreign exchange
crisis of 1997," Lee said while presiding over a weekly Cabinet meeting at his
office.
"The government is now setting up detailed countermeasures, while banks and
businesses are reinforcing their self-rescue restructuring efforts. At a time
like this, the public should have confidence in the government and muster their
strength and wisdom."
Lee's remarks appear intended to stem the spread of unrest in the financial
market to the real economy, observers say.
South Korea survived its own financial meltdown in 1997 after receiving a US$58
billion bailout package arranged by the International Monetary Fund.
Lee's finance minister, Kang Man-soo, said last week that South Korea's foreign
exchange holdings stood at $239.7 billion as of the end of September, compared to
$20.4 billion a decade ago.
In recent weeks, the value of the Korean won has steadily weakened against the
U.S. dollar, plunging to 1,330 won against the greenback on Tuesday, the weakest
level seen in 10 years and eight months. The plunge in the value of the won came
amid growing concern over the nation's shrinking foreign exchange reserves.
"Excessive optimism is dangerous, but we don't have to be mired in pessimism and
a sense of crisis. The government is now trying to cooperate closely with Japan
and China," said Lee at the Cabinet meeting.
"The government is now striving to expand its foreign exchange holdings and
liquidity, while the corporate sector is making its own restructuring effort.
Above all, the most important thing is for the government to give confidence to
the people. In that sense, the government has performed satisfactorily thus far,"
said the president.
Following the Cabinet meeting, Prime Minister Han Seung-soo presided over a
meeting with macro economy-related ministers and senior presidential secretaries
at the presidential office Cheong Wa Dae and concluded that South Korea is
capable of coping with its foreign currency liquidity problem considering the
volume of its current foreign reserves and debts, Cheong Wa Dae officials said.
"Prime Minister Han and Cabinet ministers shared the view that market
participants are reacting excessively sensitively to the external financial
market circumstances and raised the need to induce their reasonable reactions,"
an official said.
"Moreover, the nation's current account is expected to swing back to the black
starting this month, contributing to its foreign currency reserves. Depending on
the situation, the authorities will reinforce their efforts to restore market
order by investigating market-distorting factors," said the official.
In a relevant effort to overcome the crisis, President Lee said Monday that he
will propose a tripartite summit with Japan and China on the sidelines of the
Asia-Europe Summit, slated for Oct. 24-25 in Beijing, to discuss concerted
regional countermeasures to the global financial crisis.
Lee made a separate proposal last week for the finance ministers of his country,
China and Japan to discuss closer policy coordination in the face of the
U.S.-sparked global financial turmoil.
ycm@yna.co.kr