Finance minister predicts currency market will stabilize

By Hwang Doo-hyong
WASHINGTON, Oct. 11 (Yonhap) -- South Korean Finance Minister Kang Man-soo said
Saturday his government will use its foreign exchange reserve to help South
Korean banks repay their debts.
"We are providing 100 percent of the foreign currency needed by banks for
rollovers so they will not under any circumstances face defaults," Kang told
reporters here. "We have US$200 billion in external debts, and the rollover ratio
recently reached 100 percent."
The minister, who flew in to attend the annual assembly of the International
Monetary Fund and the World Bank, dismissed as "almost impossible" chances that
South Korean banks will face a massive capital flight.
He said international cooperation is badly needed to cope with the ongoing global
financial crisis, which he predicted would last six months, adding that the won's
value would stabilize on Monday's trading despite its sharp devaluation in past
days.
"That's because (South Korea's) foreign debts, even in a worst case scenario, are
at a manageable level" in relation to the country's foreign exchange reserves.
The South Korean currency has lost more than 35 percent against the U.S. dollar
this year, finishing at 1,309.00 to the greenback Friday, up 70.5 won from
Thursday's close. At one point in Friday's trading it fell to as low as 1,460.00,
the weakest since April 1998, when South Korea was hit by the Asian financial
crisis.
"South Korea's foreign exchange market should begin to stabilize starting
Monday," said Kang, despite the sharp drop in the won's value. "I have released
these statistics to convince companies that the current situation is quite
controllable."
Kang urged the world's seven largest economies to consult closely with other
countries in the currency swap market and to take further measures to cope with
the current meltdown.
"It would not be a great help if the seven advanced economies alone are trying to
solve the problem," he said, adding he had already discussed a possible currency
swap with the U.S. Treasury Department.
He also said he would soon head to Beijing to meet with Chinese officials to
discuss the financial turmoil, and stressed the need for Asian economies to
cooperate closely to prevent the U.S. financial crisis from spreading to Asia.
"On the domestic front, we are coming up with measures to head off a possible
transfer of the financial unrest in the developed countries to South Korea's
finance and economy," he said.