ID :
53009
Tue, 03/31/2009 - 07:55
Auther :
Shortlink :
https://www.oananews.org//node/53009
The shortlink copeid
BOK to focus policy on boosting slumping economy, calming markets
SEOUL, March 31 (Yonhap) -- South Korea's central bank reiterated Tuesday it will focus its monetary policy this year on preventing the local economy from severely shrinking and stabilizing financial markets.
The Korean economy, Asia's fourth-largest, contracted 5.1 percent last quarter
from three months earlier, due to tumbling exports and weak domestic demand. It
is widely expected to post a negative growth this year with the government
predicting a 2 percent fall.
"There is a possibility that corporate bankruptcies will increase and that
investments will sharply decline, aggravating the sluggish job market," the Bank
of Korea (BOK) said in an annual policy report for 2008. "This would hurt the
growth potential of the local economy and spark jitters in the financial
markets."
The BOK added that it will manage its monetary policy by closely checking
economic and financial market conditions and actively supporting liquidity to
make sure credit flows smoothly.
The central bank's pledge to prop up the slumping economy comes as the BOK cut
the key interest rate by a total of 3.25 percentage points to a record low of 2
percent between October and February. In March, it froze the rate in a bid to
gauge the effects of reductions on the economy and brace for a deeper economic
downturn.
Meanwhile, the BOK said the weight of debts floated by state agencies as a
portion of the country's foreign assets managed by the central bank declined last
year as foreign exchange authorities sold such securities to meet immediate
dollar demands.
As of the end of 2008, bonds sold by state-run agencies like Fannie Mae and
Freddie Mac accounted for 22.4 percent of the country's foreign exchange
reserves, down 6.4 percentage points from the previous year. Meanwhile, the
weight of asset-backed securities rose 5.4 percentage points to 17 percent, it
added.
In early March, the BOK said South Korea's entire foreign exchange reserves are
usable at any time because they are invested in highly liquid assets and can thus
be easily converted into cash.
South Korea's foreign reserves totaled US$201.54 billion at the end of February,
the sixth-largest in the world.
Last year, South Korea's foreign exchange reserves declined for the eighth
straight month before rebounding in December as foreign exchange authorities
tapped part of their dollar holdings to stem the won's sharp fall and ease the
credit crunch.
sooyeon@yna.co.kr
(END)
The Korean economy, Asia's fourth-largest, contracted 5.1 percent last quarter
from three months earlier, due to tumbling exports and weak domestic demand. It
is widely expected to post a negative growth this year with the government
predicting a 2 percent fall.
"There is a possibility that corporate bankruptcies will increase and that
investments will sharply decline, aggravating the sluggish job market," the Bank
of Korea (BOK) said in an annual policy report for 2008. "This would hurt the
growth potential of the local economy and spark jitters in the financial
markets."
The BOK added that it will manage its monetary policy by closely checking
economic and financial market conditions and actively supporting liquidity to
make sure credit flows smoothly.
The central bank's pledge to prop up the slumping economy comes as the BOK cut
the key interest rate by a total of 3.25 percentage points to a record low of 2
percent between October and February. In March, it froze the rate in a bid to
gauge the effects of reductions on the economy and brace for a deeper economic
downturn.
Meanwhile, the BOK said the weight of debts floated by state agencies as a
portion of the country's foreign assets managed by the central bank declined last
year as foreign exchange authorities sold such securities to meet immediate
dollar demands.
As of the end of 2008, bonds sold by state-run agencies like Fannie Mae and
Freddie Mac accounted for 22.4 percent of the country's foreign exchange
reserves, down 6.4 percentage points from the previous year. Meanwhile, the
weight of asset-backed securities rose 5.4 percentage points to 17 percent, it
added.
In early March, the BOK said South Korea's entire foreign exchange reserves are
usable at any time because they are invested in highly liquid assets and can thus
be easily converted into cash.
South Korea's foreign reserves totaled US$201.54 billion at the end of February,
the sixth-largest in the world.
Last year, South Korea's foreign exchange reserves declined for the eighth
straight month before rebounding in December as foreign exchange authorities
tapped part of their dollar holdings to stem the won's sharp fall and ease the
credit crunch.
sooyeon@yna.co.kr
(END)
