President Lee Myung Bak of South Korea commented on Tuesday that the world economic situation is worse than the conditions present during the region’s financial meltdown that led to South Korea borrowing nearly $60-billion from the IMF in 1997-8.  The Korean government is working overtime to reduce risks from jittery Asian markets, while stabilizing the fluctuating won against the dollar.  It also has to deal with sharp declines in exports due to reduced demand worldwide and shore up its banking system in the face of signs of a global recession. 

Here’s an excerpt from the International Herald Tribune (IHT):

“On Sunday, South Korea announced a US$130 billion plan to shore up the nation’s financial system, including a three-year guarantee for offshore loans domestic banks take out between Monday and the end of June 2009. The plan will also use some of Seoul’s currency reserves to pump more money into the banking system.

The move came after worries emerged that the country’s banks could be vulnerable to the global credit crunch and may not be able to acquire enough foreign currency to service offshore loans.

The government decision followed a volatile week that saw South Korean stocks record their worst single-day point decline ever on Thursday and the won currency suffered its biggest drop since the Asian crisis.”

Read the rest of the article here.

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