S. Korea to take 'preemptive' action to head off a crisis: official

SEOUL, Oct. 4 (Yonhap) -- South Korea will take "preemptive" action in order to prevent the eurozone fiscal problem from growing into a crisis that could harm the nation's financial markets, a senior finance ministry official said Tuesday.
"We will take preemptive action should there be any sign of a crisis," Vice Finance Minister Shin Je-yoon told reporters. "The government will actively explain our robust economic fundamentals to foreign media and credit ratings agencies if uneasiness spread."
His remarks came as South Korea's financial markets tumbled Tuesday on renewed fears over fiscal debt problems in Greece and a possible ripple effect on other European and global economies.
The local currency ended at 1,194 won against the greenback, down 15.9 won from Friday's close after plunging to a 15-month intra-day low of 1,210 won. Market observers say that the government's dollar-selling intervention must have eased the won's further descent.
Asked how much the government had intervened in the market on Tuesday, Shin ducked the question. Instead, he said that the government will continue its efforts to ease steep market fluctuations.
"We stick to the principle that the exchange rates should be determined in the market," he said. "We still continue our efforts to ease fluctuations and herd behavior (in the financial market)."
Shin noted that South Korea remains in a better position in its ability to cope with global financial turmoil than in 2008, citing the latest economic and financial data.
He stressed that the nation has "sufficient" foreign currency reserves and its short-term debt ratio to total borrowing also remains lower than in 2008, when the nation was hard-hit by the global financial crisis.
The official added that there is no need for a currency swap deal similar to one it signed with the United States in 2008 to secure stable dollar funding channels, considering the nation's "sound" economic and financial market situations.
kokobj74@yna.co.kr
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