BOK, gov't give warning on local currency slide

SEOUL, Feb. 22 (Yonhap) -- South Korea intends to make full use of its over
US$200 billion in foreign exchange reserves to arrest further depreciation of the
local currency, government and central bank policymakers said Sunday.

"Authorities do not put significance on maintaining a set level of foreign
reserves, and depending on circumstances the total could fall below $200
billion," said a Bank of Korea (BOK) official who asked for anonymity.
Others said that any intervention will be dictated by the market, and made clear
that talk of Seoul wanting to maintain a minimum level of reserves was not
accurate.
The BOK presently has $202 billion in reserves, down from $239.6 billion as of
last September. The won has depreciated 16.4 percent against the greenback as of
Feb. 20 compared with late last year. It closed at 1,506 won to the U.S. dollar
on Friday, down 25 won from the previous session.
The stance by BOK officials was echoed by policymakers in the Ministry of
Strategy and Finance who stressed that comments made by senior officials in the
past about maintaining a minimum amount of foreign reserves should not be viewed
as being absolute.
"The money is there to be used in case of emergency," a ministry official said.
The official added that Seoul could also fall back on foreign swap arrangements
signed with the United States, Japan and China, giving it more room to maneuver
in case of sharp fluctuation.
South Korea has a $30 billion swap arrangement with the United States, and has
agreements allowing it to withdraw similar amounts with both Japan and China.
Financial sources, meanwhile, said the recent depreciation of the won is mainly
due to foreign sell-offs caused in part by concerns that some East European
countries will default on their debts, and is not necessarily due to any adverse
developments in South Korea.
In a related move, the Financial Services Commission said it is currently
reviewing overseas loans taken out by local banks to determine the amount of
money due in the coming months.
The regulator said of the $35 billion in loans that must be paid back this year,
$10 billion come due next month.
yonngong@yna.co.kr
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