S. Korean Finance Minister Forecasts Won to Stabilize

South Korean Finance Minister Kang Man-soo said Saturday his government will use its foreign exchange reserve to help South Korean banks repay their debts.

"We are providing 100 percent of the foreign currency needed by banks for rollovers so they will not under any circumstances face defaults," Kang was quoted as telling South Korean reporters in Washington by Yonhap News. "We have $200 billion in external debts, and the rollover ratio recently reached 100 percent."

The minister, who flew in to attend the annual assembly of the International Monetary Fund and the World Bank, dismissed as "almost impossible" chances that South Korean banks will face a massive capital flight.

He said international cooperation is badly needed to cope with the ongoing global financial crisis, which he predicted would last six months, adding that the won's value would stabilize beginning Monday despite its sharp devaluation in past days.

"That's because (South Korea's) foreign debts, even in a worst case scenario, are at a manageable level" in relation to the country's foreign exchange reserves.

The South Korean currency has lost more than 35 percent against the U.S. dollar this year, finishing at 1,309.00 to the greenback Friday, up 70.5 won from Thursday's close. At one point in Friday's trading it fell to as low as 1,460.00, the weakest since April 1998, when South Korea was hit by the Asian financial crisis.

"South Korea's foreign exchange market should begin to stabilize starting Monday," said Kang, despite the sharp drop in the won's value. "I have released these statistics to convince companies that the current situation is quite controllable."

Kang urged the world's seven largest economies to consult closely with other countries in the currency swap market and to take further measures to cope with the current meltdown.

He also said he would soon visit Beijing to meet with Chinese officials to discuss the financial turmoil, and stressed the need for Asian economies to cooperate closely to prevent the U.S. financial crisis from spreading to Asia.

"On the domestic front, we are coming up with measures to head off a possible transfer of the financial unrest in the developed countries to South Korea's finance and economy," he was quoted as saying.