South Korea's finance minister Friday brushed aside rumors that the country may suffer a fresh foreign exchange crisis early next year due to a massive exodus of foreign capital, according to Yonhap News.
Fears are growing that South Korea's financial system may face a meltdown as Japanese banks could unload their holdings of bonds issued by the South Korean government to settle accounts before March.
"Just like in September, a crisis scenario is spreading as the local economy is undergoing a tough time," Finance Minister Kang Man-soo told a weekly meeting of economy-related ministers. "But it is totally groundless in light of related figures."
"The controversial debts owed to Japanese banks stand at $10.6 billion, of which only 9 percent or $1.1 billion will mature during the first quarter of next year," Kang added.
The remarks come as worries are deepening that South Korea's export-dependent economy could be hit hard by a global recession. Falling domestic demand, anemic exports growth and growing household debts are weighing on the economy.
On Thursday, the presidential office of Chong Wa Dae denied the crisis fear as "groundless," citing specific numbers of foreign debts to mature in the first quarter of next year.
Earlier, Vice Finance Minister Kim Dong-soo told a radio program that the March crisis scenario is based on "little evidence or substance," but added that the government will closely monitor the movement of Japan-linked capital.