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`Next Week to Prove Financial Crisis Rumors Wrong`

Posted September. 05, 2008 07:17,   


Strategy and Finance Minister Kang Man-soo said yesterday that next week will prove wrong rumors of a September financial crisis in Korea.

“Most government bonds will mature around Sept. 11. Next week will see the rumors proven overblown and uncertainty settling down,” he told the seventh risk management meeting in the southern Seoul suburb of Gwacheon.

“Standard & Poor’s and Moody’s have said they will not downgrade Korea’s sovereign rating.”

In a radio program, senior presidential secretary for economic policy Bahk Byung-won said, “If the term crisis is used to identify today`s economic difficulties with those of late 1997, I think it is impossible for Korea to experience another crisis. The International Monetary Fund and global investment banks say they are not convinced that Korea faces an economic crisis.”

At a briefing session of the parliamentary finance committee, Bank of Korea Governor Lee Seong-tae said, “Rumors of a black September are apparently an overactive response.”

Financial Supervisory Service Governor Kim Jong-chang held a meeting with analysts from domestic and foreign brokerages in central Seoul. He also rejected the possibility of an economic crisis, saying, “Korea has strong economic fundamentals and a sound financial market. There is no possibility that recent financial uncertainty will result in a liquidity crisis.”

“When uncertainty grows, investors are easily agitated by groundless rumors. Investors should analyze and judge economic conditions in a rational way.”

The presidential office, Strategy and Finance Ministry, central bank and financial authorities have all struggled to quell crisis rumors. On a radio program, Kwon Hyeok-se, standing commissioner of the Financial Services Commission, also said, “Lots of government bonds held by foreign investors will mature Sept. 10. With uncertainty easing in Korea’s foreign exchange market, the won-dollar exchange rate is expected to fall.”

In an interview with Yonhap News Agency, the IMF’s assistant director for Asia-Pacific Jerald Schiff said that though Korea might see economic difficulty over the next few quarters, no evidence suggests a financial crisis is coming.