The Korea Times

Central bank tilting toward rate hike

By Kim Jae-kyoung Staff reporter The nation's top central banker said Wednesday that economy was is closely approaching its maximum growth potential level, hinting that a key interest rate hike is on the cards. The remarks came after Bank of Korea (BOK) Governor Kim Choong-soo and other policymakers froze the bank's benchmark rate at the record low level of 2 percent for the 15th straight month amid fears of another financial storm created by the debt crisis in Europe. Touching on the timing of a rate increase, Kim told reporters, "Economic variables do not move at the same time, and all the variables need not reach a certain level to raise the key rate. "Although construction still remains sluggish, the job market is recovering faster than expected through the private sectors," he added. "The economy is nearing its potential growth level, and it will stay above the level in the second half, stoking inflationary pressure." The delicate tone in the official statement hinted at a rate increase in the near future. In the May statement, the central bank reiterated that it

May 12, 2010By Kim Jae-kyoung

Companies

Korea outperforms rivals in post-crisis era

By Stephen S. Roach and Sharon Lam There can be no mistaking the extraordinary resilience of the South Korean economy. On the heels of a 7.8 percent surge in real GDP in the first quarter of 2010, Moody's has just upgraded the sovereign bond ratings of Korean government debt. With good reason: Notwithstanding its high degree of dependence on exports and external demand, Korea sailed through the devastating 2008-09 financial crisis with remarkable aplomb. Moreover, it is now extending that impressive record in a still fragile post-crisis climate. This performance stands in sharp contrast with that of other economies in the region - all of which were hit extremely hard by the collapse in global trade. Not only did the Korean economy register just one quarter of sequential decline in real GDP during the Great Recession - thereby technically avoiding full-fledged recession - but the quality of its subsequent recovery is increasingly compelling. Significantly, South Korea's economic resilience is not just an outgrowth of the emergency policy actions that were put in place

May 10, 2010By Kim Jae-kyoung

Companies

Seoul stocks bounce back on aid package

By Kim Jae-kyoung Staff reporter Seoul stocks bounced back Monday on the back of eased fears over another financial crisis following Europe's joint announcement of a bailout package to support ailing European countries saddled with huge debts, such as Greece and Portugal. The benchmark KOSPI jumped 30.13 points, or 1.83 percent, to close at 1,677.63, while the tech-heavy Kosdaq rose 12.45 points, or 2.49 percent, to finish at 512.16. The won also gained ground against the greenback, ending at 1,132.1 won from 1,155.4 won Friday. The upturn was mainly due to a monster rescue package by the European Union. On Sunday, European Union ministers agreed to supply as much as 750 billion euros ($962 billion) in aid to countries battered by sovereign debt concerns. However, it is still unclear whether Asian markets, including Korea, will show a V-shaped rebound as the rescue package is unlikely to calm market fears anytime soon. The local market is expected to undergo a rollercoaster ride for the time being, depending on how the European crisis unfolds down the road. "Risky ass

May 10, 2010By Kim Jae-kyoung

Companies

Min has no interest in KEB takeover

By Kim Jae-kyoug Staff Reporter Lone Star Funds Chairman John Grayken may now feel anxious as his third attempt to sell off the fund's controlling 50.02 percent stake in Korea Exchange Bank (KEB) is likely to go adrift even before the bidding process begins. Heads of all major local banks, which have been considered potential buyers of the nation's fifth largest lender, have expressed their intention not to participate in the takeover bid for the once most popular mergers and acquisition (M&A) target. Korea Development Bank CEO Min Euoo-sung recently said that he has no intention to join in the bidding race. ``We already told Lone Star that we would not partake in the bidding race. I don't think it is desirable for the state-run lender to purchase it at such a high price,'' Min told reporters Friday during a visit to Uzbekistan. Hana Financial Group Chairman Kim Seung-yu also signaled that the group would not participate in the bid, saying, ``We have yet to consider the takeover of KEB and Woori Financial Group.'' ``An M&A is one of many alternatives but what is mor

May 6, 2010By Kim Jae-kyoung

Companies

Travel account deficit hits biggest margin

By Kim Jae-kyoung Staff Reporter The nation saw its travel account deficit rise by the widest margin in the first quarter as a growing number of Koreans travelled abroad on the back of the strengthening won and the quick economic rebound. The Bank of Korea (BOK) reported Monday that the shortfall reached $1.99 billion between January and March, compared to a surplus of $520 million during the same period last year. It was the largest year-on-year deficit increase since the central bank began compiling relevant data in 1980. The travel account tracks overseas spending by Koreans and domestic consumption by foreign travelers. Korean travelers spent a total of $4.04 billion in the first quarter, the largest amount in history and up $1.6 billion from a year ago. In contrast, spending by inbound tourists here dropped by $851 million to $2.05 billion. The central bank said this was mainly due to the won's appreciation against the greenback. "Over the past few months, more Koreans have been travelling abroad as the local currency gained more ground against the dollar. The

May 3, 2010By Kim Jae-kyoung

Companies

Central bank moving toward rate hike

By Kim Jae-kyoung Staff Reporter The central bank is showing signs of tipping the balance of its monetary policy in favor of rate hikes, joining a global wave of unwinding economic stimulus measures taken to minimize the economic downturn in the wake of the global financial crisis. Market analysts expect that a rate increase will not come in the coming months but Bank of Korea (BOK) Governor Kim Choong-soo will deliver a hawkish commentary following another rate freeze at the upcoming rate-setting meeting slated for May 12. In its semi-annual financial stability report, the Bank of Korea (BOK) stressed the need to carry out its monetary policy in a preemptive manner, saying that the effect of rate increases on the economy will be limited. The BOK froze the key rate for the 14th straight month in April. It pointed out that there is ample liquidity in the market due to a protracted low interest rate policy, and this has caused undesirable side effects, such as a rapid rise in money in circulation and a delay in corporate restructuring. ``Although there are lingering unc

May 2, 2010By Kim Jae-kyoung

Companies

Government Steps In to Curb Won’s Rise

By Kim Jae-kyoung Staff Reporter The government stepped into the currency market Tuesday to curb the won's rapid appreciation against the dollar, with the local currency under strong upward pressure due to the robust first-quarter economic performance and upcoming listing of Samsung Life Insurance. Due to the intervention, the local currency closed at 1,110.1 won per dollar, down 6.5 won from Monday when it hit a 19-month high. This was the first intervention since Oct. 1 last year, when the won rose to the upper half of the 1,170 won range. The move is interpreted as the government's intention to prevent the won-dollar exchange rate from falling below the psychologically-important 1,100 won level. "We believe there is one-sided betting on the local currency market due to excessive expectations that the Korean won will climb against the dollar," said Kim Ik-joo, chief of the international financial bureau at the Ministry of Strategy and Finance. "We will take action to stabilize the market if necessary." The local currency gained more ground in early trading as the ce

Apr 27, 2010By Kim Jae-kyoung

Companies

Economic Growth Hits 7-Year High in First Quarter

By Kim Jae-kyoung, Cho Jin-seo Staff Reporters The nation's economy grew at the fastest pace in more than seven years, in the first quarter of the year, with gross domestic product (GDP) expanding 7.8 percent compared to the same period a year ago, the Bank of Korea (BOK) said Tuesday. It was a surprisingly upbeat message from the central bank that the economy has recovered faster than predicted. It also shows that the economy's productivity has fully recovered to the pre-crisis level. Thanks to such robust growth, annual GDP will be able to grow by more than 5 percent from 2009, the finance ministry said after the BOK's report. GDP grew by 1.2 percent between the fourth quarter of 2009 and the first quarter of 2010, the report said. The figure is a standard measure of a country's economic output, and its growth rate is a barometer of its economic vibrancy. "The manufacturing sector rebounded, aided by the robust production of chips and other electronic goods. Consumer spending and facility investment maintained quarter-on-quarter growth," the bank said in a stat

Apr 27, 2010By Kim Jae-kyoung

Companies

Korea Gains Bigger Say in World Bank

By Kim Jae-kyoung Staff Reporter South Korea is expected to have a louder voice in the World Bank as its ranking in voting rights has climbed to 16th from 22nd. The Ministry of Strategy and Finance said Monday that the country's voting rights in the World Bank has been raised to 1.57 percent from 0.99 percent as part of the organization's "voice reform." At the (World Bank's) Development Committee on Sunday, member countries endorsed the reform to increase the voting power of developing and transitioning countries at the organization by 3.13 percent, bringing it to 47.19 percent. China's quota has also been raised to 4.42 percent from 2.77 percent, while Japan and Germany saw their voting power fall to 6.84 percent and 4 percent, respectively, from 7.62 percent and 4.35 percent. The voting right for the U.S., the largest stakeholder, remained unchanged at 15.85 percent. The increase came as a result of the country's seamless efforts to broaden its influence in the international community, and it is likely to pave the way for the government to raise its quota at the In

Apr 26, 2010By Kim Jae-kyoung

Companies

Will Third Time Be the Charm for Grayken?

KEB Sale Faces Similar Problems to Those in Prior 2 Tries By Kim Jae-kyoung Staff Reporter Lone Star Funds is facing a bumpy road ahead in its move to sell off its controlling 51.02 percent stake in the Korea Exchange Bank (KEB), as it is suddenly turning into a buyer's market with potential bidders showing lukewarm attitudes toward the once most popular M&A target. In addition, its attempt is taking place simultaneously with a government bid to transfer a controlling stake in the state-funded Woori Financial Group, which analysts say will make it even more difficult for the fund to find a buyer. In early April, the U.S. buyout fund resumed its efforts to sell KEB by sending out ``teaser'' letters and confidentiality agreements (CA) to six local financial groups and 50 foreign firms to notify them of the sale of the nation's fifth-largest lender. The resumption of the bank sale came nearly a year-and-a-half after HSBC revoked its $6.3 billion bid for the deal as the financial market crashed following the global financial turmoil triggered by the U.S. subprime mortgage

Apr 21, 2010By Kim Jae-kyoung

Kim Jae-kyoung

Read more

Central bank tilting toward rate hike

Korea outperforms rivals in post-crisis era

Seoul stocks bounce back on aid package

Min has no interest in KEB takeover

Travel account deficit hits biggest margin

Central bank moving toward rate hike

Government Steps In to Curb Won’s Rise

Economic Growth Hits 7-Year High in First Quarter

Korea Gains Bigger Say in World Bank

Will Third Time Be the Charm for Grayken?

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