Gov't policymakers check volatile foreign exchange market, impact on economy

SEOUL, Feb. 24 (Yonhap) -- Senior government policymakers held a meeting at the
presidential office Tuesday to exchange views on the sharp depreciation of the
Korean won and its effect on the overall economy.
Official sources said Finance Minister Yoon Jeung-hyun, Bank of Korea (BOK) Gov.
Lee Seong-tae, Financial Services Commission (FSC) Chairman Chin Dong-soo, and
Yoon Jin-shik, the chief presidential secretary for economy, met privately over
the latest developments in the foreign exchange market and global financial
situation.
Earlier in the day, the South Korean currency plunged to a near 11-year low
against the U.S. dollar as renewed concerns over a credit squeeze prompted
foreigners to dump local shares.
The won closed at 1,516.3 won to the greenback, down 27.3 won, or 1.8 percent,
from the previous session's close -- the lowest level since March 13, 1998.
Sharp fluctuation of the won raises overall uncertainties among all economic
actors that can complicate the government's efforts to stabilize the economy,
which contracted 5.6 percent in the fourth quarter of 2008. South Korea's gross
domestic product is expected post minus 2 percent growth this year.
After the meeting, an official from the Ministry of Strategy and Finance told
reporters that top policymakers concurred that they will not tolerate currency
speculators who have been cited for manipulating rates for profit.
"The government is reviewing all of its options to deal with speculation, but
nothing concrete will be announced at the moment," the expert, who declined to be
identified, said.
Another official said that Seoul will make its position known when it feels the
need to do so, but did not elaborate on the timing or what kind of announcement
will be made.
He added that particular attention is being paid to the latest financial crisis
responsible for the won's plunge and its fallout in the business sector.
Without going into details, sources said the government, the BOK and FSC are
reviewing early issuances of foreign exchange stabilization bonds, measures to
attract more investment from Korean expatriates and selling state-owned assets,
which can cause an influx of foreign currency that can help stabilize exchange
rates. In addition, Seoul may help local banks borrow money from abroad.
The latter could involve the government guaranteeing repayment of loans borrowed
by banks from abroad, sources said.
yonngong@yna.co.kr
(END)