S. Korean bank plan to help ease market jitters: experts

SEOUL, Oct. 22 (Yonhap) -- Sweeping measures taken by the South Korean government
recently will ease jitters and reduce volatility in the currency and financial
markets, experts said Wednesday.
On Sunday, the government unveiled a plan to provide three-year state guarantees
for banks' foreign debts worth up to US$100 billion and inject $30 billion into
dollar-starved banks and companies.
"To boost stability in the foreign exchange markets, first of all, local
financial institutions need to rigorously manage their foreign currency assets
and debt," the country's central bank, the Bank of Korea (BOK), said in a
statement following a meeting between economic experts and BOK Gov. Lee
Seong-tae.
In a related move, the BOK held its first open bidding for won-dollar swap deals
on Tuesday in an attempt to provide liquidity to dollar-strapped lenders. It also
plans to buy back currency stabilization bonds worth 700 billion won ($512.8
million) before maturity in a bid to provide Korean won liquidity to the market.
Economists said the country's exports, which prop up economic growth, are
expected to slow next year due to the global economic downturn.
"But as the growth of import bills is also expected to slow due to falling oil
prices, the country's goods balance is forecast to sharply improve next year,"
the statement said.
South Korea's current account deficit reached a record high in August as its
goods balance posted the largest shortfall in 12 years. But the central bank
expects the current account will remain in the black in the fourth quarter given
falling oil prices and robust exports.
Lee told a parliamentary audit on Monday that the growth of exports will likely
fall next year compared with this year. Overseas shipments, which account for
about 50 percent of the economy, may have difficulty in growing at a double-digit
rate, he added.
In early July, the central bank upwardly revised its forecast for the annual
current account shortfall to $9 billion from its initial prediction of $3
billion, which would mark the first deficit since 1997.