Gov't ready to intervene to stabilize currency market: vice minister

SEOUL, March 5 (Yonhap) -- The government is ready to take "action" when the
currency market suffers excessive fluctuations, a top economic policymaker said
Thursday.

"The government's basic stance is that foreign exchange rates should be decided
by economic fundamentals and supply and demand in the market," Vice Finance
Minister Hur Kyung-wook said on a local radio program.
"However, we still believe that the government should take immediate action to
smooth operations when the market is overshooting or suffers from speculative
forces," he said.
His comments come as the nation's currency market is being pummeled by growing
concerns over the global financial turmoil, which could make it tougher for local
banks and companies to secure dollars to service their debts.
On Monday, the won plunged to an 11-year low against the greenback, with its
value falling nearly 20 percent since the start of this year. The currency
recouped some of its losses in the past two days on apparent dollar-selling
interventions by the government.
Market jitters, however, continue to intensify over whether South Korea has
enough "ammunition" to defend its currency. The nation's foreign reserves totaled
$201.54 billion as of the end of February, down $200 million from a month
earlier, according to the central bank on Tuesday.
Some worry the amount is not enough to defend the won's slide when the nation's
short-term external debts amount to around $150 billion. Foreign media reports
have recently questioned South Korea's ability to pay maturing debts.
Hur dismissed the concerns, saying that the nation has a solid safety net against
a possible exodus of foreign capital with the $90 billion currency swap lines
with the U.S., Japan and China. Local banks and companies are also increasing
their overseas borrowings, which will help raise the nation's dollar holdings
down the road, he added.
"There is no need to worry about the foreign reserves falling below the $200
billion mark when taking action in the currency market," Hur said.
kokobj@yna.co.kr
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