S. Korea able to weather financial turmoil: top regulator

SEOUL, Nov. 12 (Yonhap) -- South Korea will be able to achieve financial
stability as the local currency is likely to firm up on the back of current
account surpluses in coming months, the top financial regulator said Wednesday.
Amid global financial turmoil, the South Korean won has been undergoing a
roller-coaster ride with its value tumbling almost 30 percent against the U.S.
dollar this year. A severe credit squeeze and volatile share prices have also
gripped the financial market, deepening worries over their negative impact on the
real economy.
"The sharp swings we are seeing in share prices and the won-dollar exchange rate
clearly reflect worries about the economic outlook. But I remain cautiously
optimistic that the economy will yet again prove its resilience and pull
through," Jun Kwang-woo, chairman of the Financial Services Commission, told a
financial conference.
South Korea is widely expected to post a current account surplus for October,
with the surplus amount likely to expand in coming months.
His remarks came as amid the deepening global financial turmoil, the government
and the central bank have been struggling to restore confidence by laying out a
set of economic stimulus packages and market stabilization measures.
Last week, the government said that it will increase government spending by 14
trillion won (US$10.5 billion) next year in a bid to prop up the slumping economy
and help low-income households weather the current financial turmoil.
The Bank of Korea (BOK) slashed its key interest rate Friday for the third time
in a month to bolster the slowing economy. In a monthly policy meeting, the BOK
lowered the benchmark seven-day repo rate by a quarter percentage point to 4
percent, the lowest level since 2006, cutting a combined 1.25 percentage point in
the span of a month.
The top financial official, meanwhile, said that South Korea needs to use the
current financial crisis as the springboard for transforming the country into a
regional financial hub.
"I believe that the global financial crisis looming over us, however grave it may
seem right now, is nevertheless an opportunity for us to take a fresh look at our
regulatory system... and take a step closer to the advanced financial system we
all would like to see," Jun added.
sooyeon@yna.co.kr
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