Presidential office denies rumor of IMF rescue fund

By Yoo Cheong-mo

SEOUL, Oct. 29 (Yonhap) -- The presidential office on Wednesday denied a stock market rumor about the nation's possible application for an International Monetary Fund (IMF) bailout fund, stressing that South Korea is not vulnerable to a financial meltdown.

"I can confidently say that there would never be an outbreak of a foreign
exchange crisis in South Korea," presidential office spokesman Lee Dong-kwan said
in his daily media briefing.
"It is a very unsound phenomenon that groundless rumors and speculation are
jolting the market, destabilizing the people's investment psychology," said the
spokesman.
Lee's remarks came as rumors that the South Korean government is seeking to apply
for an IMF currency swap program were spreading in the local stock market. The
benchmark Korea Composite Stock Price Index shed more than 3 percent on Wednesday
as it reeled from IMF-related rumors.
"The nation's current account is certain to swing back into the black this month,
while the quarterly current account surplus is expected to reach a sizable
figure. On top of that, the government has already mapped out contingency plans
for all plausible situations," said the spokesman.
"For instance, it will take about 50 months for Korea to run out of its foreign
currency reserves, even if foreign capital exits the Korean market at the present
speed. But the pace of foreign capital exits is noticeably slowing lately."
South Korea has the world's sixth-largest volume of foreign currency reserves at
nearly US$240 billion.
He stressed that the current market situation in South Korea is not serious
enough to trigger a panic, guarding against market participants' excessively
pessimistic sentiment.