Korea Could Fall Into Currency Crisis Again

Korea could fall into a currency crisis like the one it experienced during the Asian financial crisis, some warn.

The United Nations Economic and Social Development Agency in Asia and the Pacific (ESCAP) released its 2007 Asian Pacific economy and society review on April 18. The report says that four out of the five nations hit by the crisis--South Korea, Indonesia, Thailand, the Philippines and Malaysia--may be exposed to a new currency crisis except for Malaysia.

Korea in particular has been the most vulnerable to a crisis since 2005 compared to the rest according to the report.

The report points out that another crisis may come because of currency appreciation led by capital influx in the short term and inflationary pressure following high oil prices. But the four countries have managed to avoid a currency disaster and have achieved high growth thus far.

Central banks in countries at risk are being asked to focus on maintaining foreign exchange rates to prevent a rise in currency value.

kimsunmi@donga.com