S. Korea ready to act in case of speculative attack on won: Official

S. Korea ready to act in case of speculative attack on won: Official

Agence France-Presse, Seoul

South Korea's top economic official said on Thursday the
government would not sit idle in case of a speculative attack on
the country's currency.

Finance and Economy Minister Lee Hun-Jai said foreign exchange
rates must be determined by the market. "The government will not
use the won-dollar rate as a policy tool."

"But the government will not sit idle" if speculative
investors attack the country's foreign exchange market, he said,
adding the government was closely monitoring the movement of
foreign exchange rates.

"We will take action only if needed to stem any speculative
movements ," he said.

The won continued to firm against the U.S. dollar on Thursday
as many local companies sold off their dollar holdings even at a
loss and their future dollar-denominated receipts.

"We're now facing even the 1,060 won level. The pace is too
fast and there may be a correction, but any correction will be
brief," a local dealer said.

The won has appreciated more than 10 percent against the
greenback this year, putting pressure on exports.

The won's steady appreciation sparked concerns about South
Korea's economy, which relies heavily on exports. A stronger won
makes South Korea products more expensive abroad.

Lee admitted the economic outlook for 2005 "appears not to be
very bright" due to high oil prices, slowed export growth and the
sluggish construction sector.

But he said South Korea's economic fundamentals remained
strong enough to overcome "difficulties in this transitional
period." "Our economic situation is not so serious."

In a surprise move, the central Bank of Korea cut its
benchmark interest rate target for November by 0.25 percentage
points to 3.25 percent to stimulate growth. Some analysts said
the cut was made under pressure.

Lee, however, noted the government would not intervene in the
central bank's rate-setting process.