Likelihood of FX crisis in March very low, Samsung says

SEOUL, Feb. 25 (Yonhap) -- The research unit of Samsung Group, South Korea's
biggest business conglomerate, played down on Wednesday market speculation that
the nation could face a foreign exchange crisis next month due to a dollar
shortage.
Fears of a so-called "March crisis" have gripped the nation's financial markets,
with some analysts speculating that the nation may undergo a foreign exchange
crisis if Japanese lenders withdraw all of their loans maturing next month from
South Korea.
The rumor has gained traction as the nation's banks are experiencing a relentless
dollar shortage amid prolonged risk aversion in international financial markets.
"The likelihood of a March crisis is very low," said Chung Koo-hyun, head of
Samsung Economic Research Institute, in a weekly meeting with Samsung's chief
executives.
Chung said the nation's more than US$200 billion in foreign reserves were
sufficient to meet a potential surge in dollar demand next month.
"If everything bad that could happen did happen at the same time," said Chung,
"the nation would need as much as $25 billion to meet dollar demand."
"However, the possibility of such a worst-case scenario is very small," he added.
"Even if such a scenario were to occur, the government could cope with it given
the size of foreign exchange reserves."
So far this year, the South Korean currency has lost about 17 percent of its
value against the U.S. dollar as the nation heads for its first recession in 11
years.
South Korea was gripped by similar fears in September of last year, though
jitters subsided after the nation agreed on currency swap lines with the United
States, China and Japan.
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