Cheong Wa Dae denies rumor of financial meltdown in March

By Yoo Cheong-mo
SEOUL, Dec. 4 (Yonhap) -- Cheong Wa Dae, the presidential office, on Thursday
denied as groundless a rumor that a fresh foreign exchange crisis will break out
in South Korea next March due to a massive exodus of foreign capital.
A rumor has been circulating that South Korea's financial system will face
intense stresses in March 2009, as Japanese banks will massively sell their bonds
issued by the South Korean government to settle their accounts before March.
"Some local media are raising speculation about the outbreak of a foreign
exchange crisis in March. But we have already witnessed the so-called 'black
September' scenario turning out to be false," deputy presidential spokeswoman Kim
Eun-hye said in a daily media briefing.
"The rumor mongers say Japanese financial companies will carry out large-scale
withdrawal of capital from South Korea ahead of their account settlement in
March. But the (Korean) government has confirmed the amount of foreign debts
payable to Japan by the end of the first quarter of next year totals just US$1
billion."
She stressed that the Japan-related foreign debt figure alone vividly underlines
the groundless nature of the meltdown rumor.
"Groundless rumors generated on the basis of public unrest and their spread by
irresponsible media outlets will all seriously undermine national interest," said
the spokeswoman.
A sense of crisis is mounting in South Korea lately, as a combination of
declining exports, falling domestic demand, and rampant corporate and individual
insolvency are expected to bring down the nation's economic growth to record-low
levels in 2009.
"Minerva," a famous but unidentified netizen who has precisely predicted the
crashes in the stock market and the value of the Korean won, has added to the
public jitters by saying that South Korea's economy will face a catastrophe
before March 2009, unless the government fails to deal with the upcoming
stagflation.
Meanwhile, spokeswoman Kim said the government has yet to finalize its position
on whether to bail out the South Korean auto industry plagued by shrinking sales
at home and abroad.
"Domestic automakers have asked for government support. But nothing has been
finalized. Considering the enormous business difficulties faced by the
automakers, the government will make its decision as soon as possible," she said.
ycm@yna.co.kr
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