S. Korea ready to act in case of speculative attack on won: Official<\/p>\n
Agence France-Presse, Seoul<\/p>\n
South Korea's top economic official said on Thursday the
\ngovernment would not sit idle in case of a speculative attack on
\nthe country's currency.<\/p>\n
Finance and Economy Minister Lee Hun-Jai said foreign exchange
\nrates must be determined by the market. \"The government will not
\nuse the won-dollar rate as a policy tool.\"<\/p>\n
\"But the government will not sit idle\" if speculative
\ninvestors attack the country's foreign exchange market, he said,
\nadding the government was closely monitoring the movement of
\nforeign exchange rates.<\/p>\n
\"We will take action only if needed to stem any speculative
\nmovements ,\" he said.<\/p>\n
The won continued to firm against the U.S. dollar on Thursday
\nas many local companies sold off their dollar holdings even at a
\nloss and their future dollar-denominated receipts.<\/p>\n
\"We're now facing even the 1,060 won level. The pace is too
\nfast and there may be a correction, but any correction will be
\nbrief,\" a local dealer said.<\/p>\n
The won has appreciated more than 10 percent against the
\ngreenback this year, putting pressure on exports.<\/p>\n
The won's steady appreciation sparked concerns about South
\nKorea's economy, which relies heavily on exports. A stronger won
\nmakes South Korea products more expensive abroad.<\/p>\n
Lee admitted the economic outlook for 2005 \"appears not to be
\nvery bright\" due to high oil prices, slowed export growth and the
\nsluggish construction sector.<\/p>\n
But he said South Korea's economic fundamentals remained
\nstrong enough to overcome \"difficulties in this transitional
\nperiod.\" \"Our economic situation is not so serious.\"<\/p>\n
In a surprise move, the central Bank of Korea cut its
\nbenchmark interest rate target for November by 0.25 percentage
\npoints to 3.25 percent to stimulate growth. Some analysts said
\nthe cut was made under pressure.<\/p>\n
Lee, however, noted the government would not intervene in the
\ncentral bank's rate-setting process.<\/p>",
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