12-11-목

S. Korean central bank cuts key rate to 3 pct By Kim Soo-yeonSEOUL, Dec. 11 (Yonhap) -- South Korea's central bank lowered its key interest rate by a record one percentage point on Thursday, the fourth rate cut in two months, in an effort to bolster the slowing economy. In a monthly policy meeting, the Bank of Korea (BOK) slashed the benchmark seven-day repo rate to a record low of 3 percent. The previous lowest level was 3.25 percent set in early November 2004. Before Thursday's move, the BOK had cut the rate by a combined 1.25 percentage points to 4 percent since early October this year in a bid to keep global financial turmoil from impacting the real economy.
S. Korea's biz investment expected to contract in 2009: poll SEOUL, Dec. 10 (Yonhap) -- South Korea's business investment is expected to contract in 2009 from this year as the global slump compels entrepreneurs to be more conservative, a poll released by the Korea Development Bank (KDB) said Wednesday. The poll conducted on 3,600 local companies showed total investment in the new year will reach 91.7 trillion won (US$65.8 billion), down 6.8 percent from the 98.3 trillion won forecast for 2008. The state-run bank said if business investment falls, it will be the first negative growth in seven years after the 4.5 percent year-on-year drop tallied in 2002. By sector, the KDB said manufacturing could experience a sharper drop vis-a-vis other areas. Manufacturing-related investment may decline 9.3 percent, with information technology likely to see funds cut by 24.5 percent. Investment in semiconductors and machinery could drop 26.8 percent and 23.3 percent, respectively, with numbers for petrochemicals and shipbuilding to drop 7.7 and 6.4 percent each. The survey added that while investment by large conglomerates may decline 8.0 percent, that for small- and medium-sized enterprises could nosedive 31.1 percent, on par with the drop experienced in 1998 during the Asian financial crisis.
Samsung, Hyundai not to 'artificially' lay off workers: officials SEOUL, Dec. 10 (Yonhap) -- South Korea's two largest conglomerates said Wednesday they will not engage in artificial restructuring efforts, despite the slowdown in the global economy. A senior executive at Samsung said any movements of workers will be those carried out on a regular basis. "The group as a whole is not planning to adjust its workforce," said the source, who declined to be identified. He added that the number of executives will remain similar to the present level and stressed that opportunities coexist with challenges, hinting that Samsung will take an aggressive posture to expand its global market share in semiconductors, displays and mobile phones. The stance contrasts with announcements by rivals Sony and Toshiba, which said they will lay off large numbers of workers to cope with the liquidity shortage, the steep drop in consumption and declining business investment. Hyundai Motor Co. also said it will not fire workers to overcome its current difficulties. "Any layoffs will be of the normal variety involving those that have not performed well and those reaching retirement age," an insider of South Korea's largest carmaker said. The company had to cut back on production and halted overtime operations at its assembly lines as sales have dried up in both the domestic and overseas markets. The announcement by the two conglomerates follows similar stances by the LG and SK groups, which have said they do not plan any massive restructuring. The decision by the country's four largest conglomerates is an indication that local companies are vying to use the current economic crisis as a springboard to further expand their businesses. Experts have said that while South Korea is suffering, rivals are doing no better, and that companies that can stay afloat and the make right management decisions may be able to grab a greater share of the market down the road.
Seoul shares open higher on Wall Street gains SEOUL, Dec. 11 (Yonhap) -- South Korean stocks started higher Thursday as foreign investors picked up shares following overnight rises on Wall Street, analysts said. The benchmark Korea Composite Stock Price Index (KOSPI) inched up 1.49 points, or 0.13 percent, to 1,147.36 in the first 15 minutes of trading. On Wednesday, U.S. stocks advanced as energy and material stocks gained ground due to a recent spike in commodity prices. The Dow Jones industrial average rose 0.81 percent and the tech-dominated Nasdaq composite index added 1.17 percent. The local currency was trading at 1,362.2 to the U.S. dollar as of 9:15 a.m., up 31.6 won from Wednesday's close.
Seoul says 'no' to introducing foreign cigarettes into military SEOUL, Dec. 10 (Yonhap) -- The South Korean Army has decided to postpone the introduction of foreign tobacco products at its post exchange stores by at least another year, Army officials said Wednesday. The decision was reached at a meeting of 15 selected service members, each representing a rank in the armed service from private to colonel, officials said. Three foreign manufacturers, including British American Tobacco and Philip Morris International, had applied for permission to sell their products on bases. "The 15 representatives of each rank in the Army decided to exclude all foreign tobacco products," an official told reporters, asking not to be identified. The decision is a repetition of past years. The Army, with over 500,000 service members, represents one of the largest consuming groups in the country. Army officials said the decision was reached in a vote where each ballot, regardless of the rank of the person who cast it, carried the same weight.
Chinese foreign minister to meet nuclear envoys By Lee Chi-dongBEIJING, Dec. 11 (Yonhap) -- Chinese Foreign Minister Yang Jiechi plans to meet top nuclear envoys from North Korea and its five dialogue partners at 10 a.m. (Beijing time) on Thursday, South Korean delegates said. The foreign minister of host China usually holds a group meeting with the heads of the delegates before ending a six-way session. This week's talks also involving South Korea, the United States, Russia, and Japan were initially supposed to finish on Wednesday but China has not called an end to them. Envoys said earlier it was unclear whether the negotiations will be extended into Thursday or not. They failed Wednesday to narrow differences on ways to inspect Pyongyang's nuclear facilities -- a main agenda item. "We didn't make any progress today," top U.S. nuclear negotiator Christopher Hill told reporters after the third-day marathon session.
U.S. denies report it has acknowledged N. Korea as a nuclear power By Hwang Doo-hyongWASHINGTON, Dec. 10 (Yonhap) -- The State Department Wednesday refuted a U.S. defense policy report that described North Korea as a nuclear weapons state, saying the report does not represent the U.S. government's official position. "That is not our national policy," spokesman Sean McCormack said. "And the document they referenced does not represent the official views of the United States."The spokesman was referring to a recent report of the U.S. Joint Forces Command (USJFCOM), titled "Joint Operating Environment (JOE) 2008: Challenges and Implications for the Future Joint Force," which depicted North Korea as one of five Asian nuclear powers, along with China, India, Pakistan and Russia. North Korea's official Korean Central News Agency earlier in the day cited the U.S. defense report, saying, "It is the first time that a U.S. government report has acknowledged and announced that North Korea is a nuclear weapons state."USJFCOM also released a statement on its Web site, saying, "The statement regarding North Korea does not reflect official U.S. government policy regarding the status of North Korea. The U.S. government has long said that we will never accept North Korea as a nuclear power.""This JOE is fundamentally speculative in nature and is intended to serve as a starting point for discussions about the future security environment," the statement said. "The Joint Operating Environment is not meant to be a statement of policy."The remarks follow a similar statement by the Pentagon Tuesday that said, "As a matter of policy, we do not recognize North Korea as a nuclear state. What was contained in a recent Joint Forces Command report does not reflect official U.S. government policy regarding the status of North Korea."The Joint Forces Command, based in Norfolk, Virginia, is responsible for transforming the U.S. military to meet future threats through education and experimentation. The controversy comes at a sensitive time when chief nuclear envoys of the two Koreas, the U.S., China, Japan and Russia are meeting in Beijing to agree on a verification regime on the nuclear list presented by the North in June. They, however, have yet to produce an agreement on taking samples from North Korea's Yongbyon nuclear reactor in the face of strong resistance by Kim Kye-gwan, Pyongyang's chief nuclear negotiator, who told the six-way forum that allowing samples would be tantamount to be getting undressed in front of the hostile U.S. Analysts say the North has no intention of dealing further with the outgoing Bush administration, and is awaiting the inauguration of Barack Obama. North Korea detonated its first nuclear device in October 2006 and claimed the test was a success. Debate continues, however, among experts and policymakers over whether the detonation should in fact be seen as a success due to its low yield. President-elect Obama said on the campaign trail that the North has eight nuclear weapons, without elaborating. U.S. and South Korean intelligence authorities have said the North has enough plutonium to produce several nuclear warheads, but have yet to officially confirm Pyongyang already possesses a specific number.
U.S. hints at putting N. Korea back on terror list over stalled nuke talks By Hwang Doo-hyongWASHINGTON, Dec. 10 (Yonhap) -- The United States Wednesday hinted at relisting North Korea as a state sponsor of terrorism since the North has balked at allowing samples to be taken from its nuclear facilities under the terms of the multilateral aid-for-denuclearization talks. State Department spokesman Sean McCormack told a daily news briefing that that action cannot be ruled out. "Look, I guess, I suppose, these things are always possible," McCormack said when asked if the U.S. is considering listing the North again. "You know, I don't know the ins and outs of the law. But I think it's based on behavior. And we'll see what behavior North Korea engages in."McCormack was referring to the latest round of the six-party talks, which ended with no agreement from the North to allow sampling at its Yongbyon nuclear complex as part of a nuclear verification protocol. The third and possibly last day of talks concluded Wednesday in Beijing. Kim Kye-gwan, the North's chief nuclear envoy, refused to guarantee the sampling in writing, citing what he called hostile U.S. policy toward North Korea. The U.S. delisted the North in October, saying Pyongyang agreed to the sampling during a visit by Christopher Hill, assistant secretary of state. In Beijing Wednesday, North Korea's Kim, however, refuted the U.S. claim that the sides have a common understanding on the sampling issue. Kim's remarks buttressed the views of pessimists that the North, in its attempt to get energy aid in the on-and-off denuclearization process, has no intention of dealing further with the outgoing Bush administration. "We know what was agreed upon. We have it on paper," McCormack said. "We have a solid understanding of it. Other countries within the six-party talks share that understanding."The spokesman said his government will "go down another pathway" if the North fails to agree on the sampling, apparently referring to putting the North back on the terrorism list. North Korea remains one of the most heavily sanctioned nations in the world by the U.S. and international community. "So there's still a lot of leverage in place," McCormack said. "Part of that equation in making the assessment -- have they taken those steps, you know, have they made a final decision to denuclearize? -- is a verification protocol and implementation of that verification protocol," the spokesman said. "I mean, the ultimate metric in judging that is the fact that they don't -- they no longer have a nuclear program," he said. "You know, we're not near that stage at this point, but there are important other waypoints along the way. This verification protocol is one of them."hdh@yna.co.kr
(LEAD) China undecided on whether to continue talks By Lee Chi-dongBEIJING, Dec. 10 (Yonhap) -- Negotiators ended their Wednesday session of six-way talks on the North Korean nuclear issue, but host China has yet to inform the participants whether this round's negotiations will continue, South Korea's chief nuclear envoy said. "The Chinese side has yet to offer a plan," Kim Sook said over the phone as he left the venue of the talks. Earlier in the day, top U.S. envoy Christopher Hill decided to extend his stay in Beijing by another day, "Assistant Secretary of State Christopher Hill was supposed to leave for Washington today, but he has decided not to," Susan N. Stevenson, a spokesperson at the U.S. Embassy in Beijing, told Yonhap News Agency. She refused to confirm whether it means the talks will end on Wednesday, as originally scheduled.
Nuclear talks in stalemate, Hill says By Lee Chi-dongBEIJING, Dec. 10 (Yonhap) -- The six-way talks on the North Korean nuclear program remain deadlocked, and it is not clear whether the envoys will continue negotiations, top U.S. envoy Christopher Hill said Wednesday. "We have not achieved our goal," Hill told reporters after the third-day session. "It's not trending in the right direction."Hill said he is unsure whether the talks will be extended into Thursday.
(3rd LD) Deadlocked nuclear talks likely to end without deal (ATTN: UPDATES throughout with additional comments by envoys, background)By Lee Chi-dongBEIJING, Dec. 10 (Yonhap) -- Envoys from the U.S. and its allies failed Wednesday to coax North Korea into agreeing on sampling and other scientific measures necessary to inspect its nuclear facilities, darkening prospects for any new deal. This week's six-nation talks are one of the last opportunities for the Bush administration to save a troubled aid-for-denuclearization deal it signed in 2007, despite strong opposition from hard-liners in Washington. "We didn't make any progress today," top U.S. nuclear negotiator Christopher Hill told reporters after the third-day marathon session focused on a Chinese-presented draft of a verification protocol. "We've had considerable discussions about the issues, and I can't say there were any breakthroughs." South Korea's top envoy, Kim Sook, echoed Hill's remarks and doubted the possibility of an agreement, even though the talks may be extended into Thursday. "It was a long day, but I have nothing to tell you in terms of progress," Kim said. "There are several core contents in a (planned) verification protocol, especially scientific procedures, including sampling. North Korea said it can't accept that. It gave fundamental and comprehensive reasons."North Korea, which conducted an underground nuclear test in 2006, reiterated its claim that it is a nuclear state, although the international community does not recognize it as such. Kim said Pyongyang refused to move a step forward from the agreement made in the previous round of talks held in July, in which it agreed to grant inspectors access to "facilities, review of documents, interviews with technical personnel and other measures unanimously agreed upon among the six parties." The verification protocol now being planned will provide more detailed guidelines on which inspection measures will be used. The U.S. and its allies emphasize that "sampling and other forensic activities" are crucial to thorough verification, in addition to the other three agreed-upon measures. "There was little progress from the three things agreed upon in July," Kim said, adding it will be difficult for host China to offer a draft that is modified from the first one distributed on Tuesday. The South Korean and U.S. envoys said they are unsure whether the talks will be extended into Thursday. This round of six-way talks was initially supposed to finish on Wednesday, but host China has not yet called an end to it. China is expected to inform the other parties on Thursday morning on whether talks will be continued or not, envoys said.
(LEAD) Stalled talks likely to end without deal By Lee Chi-dongBEIJING, Dec. 11 (Yonhap) -- Veteran negotiators at this week's six-way talks on North Korea's nuclear program risked going back home without a deal Thursday in what is likely the last chance for the Bush administration to save a troubled aid-for-denuclearization agreement signed last year. Host China called a plenary session at 9 a.m. (Beijing time) on Thursday at Daioyutai State Guest House, which may conclude the talks, South Korean delegates said. There are no signs that progress has been made towards agreeing on ways of inspecting Pyongyang's nuclear facilities. Chinese Foreign Minister Yang Jiechi plans to meet with top nuclear envoys from North Korea and its five dialogue partners one hour later. The foreign minister usually holds a group meeting with the delegates before ending a six-way session. Pyongyang refused to allow international inspectors to take samples from soil and waste at its nuclear sites for analysis at foreign laboratories, according to South Korean envoy Kim Sook. "There are several core contents in a (planned) verification protocol, especially scientific procedures including sampling. North Korea said it can't accept that. It gave fundamental and comprehensive reasons," Kim told reporters Wednesday night after the third day of the session. North Korea, which conducted an underground nuclear test in 2006, reiterated its claim that it is a nuclear state, he said, although the international community does not recognize it as such. Documenting detailed verification methods is a key goal in this week's six-way talks, which also involve the U.S., China, Russia and Japan. Christopher Hill, Washington's representative to the talks, also said no progress has been made. "We have not achieved our goal," he said. "It's not trending in the right direction."The comments by Kim and Hill raised the possibility that the talks, which were originally supposed to end Wednesday, will finish without any significant deal. The South Korean negotiator said he doubted that China will present a modified draft of a verification protocol, saying differences remain too wide. A stalemate on the verification issue will also affect negotiations on the other main agenda items, which include a timetable for completing the North's disabling of its Yongbyon nuclear reactor and the delivery of energy aid by its dialogue partners. South Korea said it has pushed for a package deal. "The issues of verification and energy assistance are comprehensively connected," Kim, its envoy, said earlier.
Seoul's foreign reserves 'enough' to cover external debt: official SEOUL, Dec. 11 (Yonhap) -- South Korea holds "enough" foreign exchange reserves to pay its external debts and avoid a possible liquidity crunch, a senior economic policymaker said Thursday. "Our US$200 billion foreign reserves consist mostly of assets that can be easily recouped," Vice Finance Minister Kim Dong-soo said on a local radio program. "The global financial crunch caused the reserves to decline recently, but the amount is still the world's sixth-largest and we think it is enough to cope with external payment demand."Thanks to an additional currency swap line with the U.S. and a surplus in the nation's current account, Kim forecast that the country's foreign reserves would not decline significantly. According to the Bank of Korea, the nation's foreign reserves totaled $200.51 billion at the end of November, down $11.74 billion from a month ago. This marked the eighth straight month of decline in foreign reserves and raised the possibility of a shortage of funds needed to cope with emergent economic conditions. As of the end of November, South Korea had $425.09 billion in external debts, becoming a net debtor nation for the first time in eight years. Short-term debts, which mature within a year, accounted for 45 percent of the total. Meanwhile, Kim projected that South Korea's economy would weaken further in the first half of next year but forecast a gradual rebound in the second half. The vice finance minister pledged that the government would continue to supply liquidity to cash-strapped banks and industries.
Obama urged to send special envoy to meet with N. Korean leader By Hwang Doo-hyongWASHINGTON, Dec. 10 (Yonhap) -- A prominent U.S. expert on Korea called on Washington's incoming Barack Obama administration on Wednesday to send a special envoy to meet directly with North Korean leader Kim Jong-il and discuss the denuclearization of the communist state. The remarks by Evans Revere, president of the New York-based Korea Society, is in line with Obama's campaign pledge that he will be willing to meet with the leaders of rogue states. Revere, former deputy assistant secretary of state, told a forum at the KORUS House here that a lack of engagement with the North at the "crucial decision-making level in Pyongyang" has been a major foreign policy flaw of the Bush White House. "After a careful policy review, after close coordinations with our allies and after developing a clear negotiating strategy, we should be prepared to add an additional channel to our multilateral and bilateral dialogue channel with the DPRK," he said, referring to the North's official name, the Democratic People's Republic of Korea. "Engaging with the DPRK's leadership at the highest possible level can be valuable in terms of ensuring that the DPRK understands clearly that the U.S. government means business when it advocates a robust U.S. diplomatic approach and this approach has a personal blessing of the president of the U.S.," he said. He said the series of summit meetings that South Korea, China and Japan have held with North Korea's Kim since 2000 have helped enhance mutual understanding and resolve pending issues to some extent. "Only engagement in the most top leadership in Pyongyang has enabled serious discussions of fundamental strategic issues," he said. "In the North Korean system, decisions about core national security issues are made by one person whom we have not engaged with in recent years."Revere also advised the Obama to seek closer ties with South Korea and Japan in dealing with North Korea. "The new administration has to be aware that the U.S. management of North Korea issue has raised concerns in Seoul, Tokyo and elsewhere in recent years," he said. "It is fair to raise the adequacy of the consultative process Washington has followed in recent years."Revere stressed the need to prioritize pragmatism over ideology in the North Korean nuclear issue, saying, "We need policies firmed rooted in reality and not wishful thinking."On the pending Korea-U.S. free trade agreement (FTA), Revere advised South Korea to come up with a "creative mechanism" to address U.S. concerns over the American auto crisis. He described trade and exports as "vital components of America's path to economic recovery," and warned that a failure to pass the FTA would be a major blow to bilateral ties between Seoul and Washington.

한은 기준금리 1%P 파격 인하(종합)
연 3.00%로 낮춰..사상 최저(서울=연합뉴스) 윤근영 기자= 한국은행은 11일 기준금리를 현행 4.00%에서 3.00%로 1.00%포인트 내린다고 발표했다. 한은은 이날 오전 정례 금통위원회에서 이렇게 결정했다고 밝혔다.
한은은 5.25%였던 기준금리를 지난 10월 9일 5.0%로 내린데 이어 같은 달 28일에는 4.25%로 0.75% 포인트나 파격적으로 인하했고 지난달 7일에는 4.00%로 낮췄다. 기준금리 3.00%는 역대 최저치인 3.25%(2004년 11월11일)보다 0.25%포인트나 낮은 것이다. 통화정책이 통화량에서 기준금리로 바뀐 1999년 이후에 기준금리가 3.0%로 내려간 적은 한번도 없었다. 이번 금리인하는 경기의 빠른 하강을 막고 자금경색을 풀어주기 위한 것으로 보인다. 부동산 가격이 급락할 가능성이 있다는 점도 금리인하의 배경으로 해석되고 있다. 두바이유 가격이 배럴당 40달러 아래로 내려오는 등 국제유가가 안정되면서 소비자물가 상승률이 빠르게 둔화되고 있는 점도 한은의 금리인하 폭을 확대했다. 한은 관계자는 "경기가 빠르게 하강하고 있는데 비해 물가는 상대적으로 안정돼 있다는 점 등을 감안해 기준금리가 결정됐다"면서 "금통위원들이 나중에 논의해 결정하겠지만 경기상황에 따라 기준금리가 추가로 내릴 여지는 있다"고 말했다. 경제 전문가들은 한은이 기준금리를 내년 상반기에 2.5%까지 내릴 가능성이 있는 것으로 내다보고 있다.


재정차관 "美 국채 언제든 팔수 있다"
"필요시 산업에 직접 자금공급도 검토"(서울=연합뉴스) 박대한 기자 = 김동수 기획재정부 제1차관은 11일 외환보유액의 상당 부분을 차지하고 있는 미국 국채에 대해 "우리가 필요할 경우 팔 수 있는 자산이다"고 말했다. 김 차관은 이날 불교방송 라디오에 출연, 미 국채의 경우 사실상 매각하기 어려워 가용 외환보유액이 얼마되지 않는다는 지적에 대해 "세계적으로 미 국채는 유동성이 상당히 높다"면서 이렇게 밝혔다.
김 차관은 "지금 보유하고 있는 2천억달러의 보유액은 모두 다 유동성이 매우 높은 자산 형태로 가지고 있다"면서 "글로벌 금융시장 자금경색을 보유액으로 해소하다보니 2천억달러로 줄었는데 이것만 해도 전 세계 6번째 수준이고 긴급시 대외 지급수요를 감당하기에 충분하다"고 강조했다. 경상수지가 10월에 이어 연말까지 흑자 기조를 유지하는 가운데 한미 통화 스와프 자금의 시중 공급, 외국인 채권.주식 매도 규모 감소 등을 종합적으로 고려하면 외환보유액은 현재 수준에서 큰 변화가 없을 것이라고 김 차관은 전망했다. 시중 유동성 공급과 관련해 그는 "은행들이 자기자본을 확충하도록 유도하면서 자본공급도 원활히 하도록 할 것"이라며 "필요한 산업에 (정부가) 직접적으로 자금 공급을 하는 노력도 기울이겠다"고 밝혔다. 그는 "내년 상반기 우리 경제가 더 어려워질 것 같아 정부는 최선의 노력을 다할 것"이라며 "하반기 이후 바닥을 다지면서 완만하게나마 회복될 것으로 본다"고 예상했다.

(LEAD) BOK cuts key rate to record low 3 pct By Kim Soo-yeonSEOUL, Dec. 11 (Yonhap) -- South Korea's central bank lowered its key interest rate by a record one percentage point on Thursday, the fourth rate cut in two months, in an effort to bolster the slowing economy. In a monthly policy meeting, the Bank of Korea (BOK) slashed the benchmark seven-day repo rate to a record low of 3 percent. The previous lowest level was 3.25 percent set in early November 2004. Before Thursday's move, the BOK had cut the rate by a combined 1.25 percentage points to 4 percent since early October in a bid to keep global financial turmoil from impacting the real economy. The BOK's decision was not in line with a forecast made by 17 economists polled by Yonhap Infomax, the financial news arm of Yonhap News Agency. A total of nine experts predicted a half-a-percentage point cut, while the remainder expected a quarter percentage point reduction. "The South Korean economy is slowing at a faster-than-expected pace as exports falter amid weak domestic demand," the BOK said in a statement. "The growth of the local economy is expected to sharply fall as domestic and overseas demand will likely deteriorate."The move follows the government's unveiling of a string of measures aimed at jumpstarting the sagging economy, which include additional fiscal spending and tax cuts. "A full percentage point rate cut came as a surprise. The central bank seemed to act preemptively as economic growth for next year is widely expected to sharply slow," said Kim Jae-eun, an economist at Hana Daetoo Securities Co. "The BOK is expected to continue its monetary easing until the first quarter of next year."The South Korean economy grew 0.5 percent in the third quarter from three months earlier, the weakest growth in four years, as exports fell and domestic demand stagnated. Asia's fourth-largest economy is expected to further lose steam next year as exports, which account for about 60 percent of the economy, have already shown signs of slowing. The Korean economy grew 5 percent last year. South Korean overseas shipments declined 18.3 percent on-year in November, the biggest drop in seven years, as the global economic downturn dealt a blow to emerging markets like China, the main destination for Korean goods. International bodies and global investment banks have laid out a gloomy outlook for the Korean economy next year. The International Monetary Fund cut its growth prediction for the Korean economy to 2 percent in 2009 from 3.5 percent. UBS AG forecast that Korea's economy will contract 3 percent next year. Despite the predictions, the government has set its growth target at 4 percent. Meanwhile, the country's consumer prices grew 4.5 percent on-year in November, the slowest growth in seven months, as oil and raw material prices declined. However, prices still breached the BOK's target range of 2.5-3.5 percent for the 12th straight month. Experts said the BOK is expected to reduce borrowing costs until next year to cushion the impact of the global recession on the export-driven local economy. "Downside risk to economic growth is increasing, which also calls for aggressive economic stimulus packages from the government," said Im No-jung, an economist at Solomon Investment & Securities Co. "The BOK is expected to cut the rate down the road in a concerted effort to boost the economy."
Seoul shares open higher on Wall Street gains SEOUL, Dec. 11 (Yonhap) -- South Korean stocks started higher Thursday as foreign investors picked up shares following overnight rises on Wall Street, analysts said. The benchmark Korea Composite Stock Price Index (KOSPI) inched up 1.49 points, or 0.13 percent, to 1,147.36 in the first 15 minutes of trading. On Wednesday, U.S. stocks advanced as energy and material stocks gained ground due to a recent spike in commodity prices. The Dow Jones industrial average rose 0.81 percent and the tech-dominated Nasdaq composite index added 1.17 percent. The local currency was trading at 1,362.2 to the U.S. dollar as of 9:15 a.m., up 31.6 won from Wednesday's close.
Hyundai Motor, Tele Atlas sign alliance deal on digital maps SEOUL, Dec. 11 (Yonhap) -- Hyundai Motor Co., South Korea's top automaker, said Thursday it had signed an agreement with Tele Atlas, a Dutch digital map-making unit of TomTom NV, to collaborate on digital maps for car navigation systems. Financial terms of the deal were not disclosed. Under the agreement, the Dutch company's digital map will mark locations of Hyundai worldwide, allowing Hyundai's consumers to find the nearest Hyundai office or service center on their in-car navigation systems and mobile phones, the South Korean company said in a statement. Tele Atlas has maps of roads in 146 countries with more than 400 million users, Hyundai said.
Gov't weighs support for auto parts industry SEOUL, Dec. 11 (Yonhap) -- The government is considering providing liquidity to local auto parts makers to help them overcome a cash crunch stemming from auto companies' output cuts, officials said Thursday. The move comes as Hyundai Motor Co. and other car makers, stung by a sharp drop in domestic and overseas demand, have announced plans to reduce output, dealing a harsh blow to the auto parts industry. Officials at the Ministry of Knowledge Economy said state money may be pooled into a fund created by industry leader Hyundai Motor and the state-run Industrial Bank of Korea (IBK) to help cash-strapped auto parts suppliers. However, it was not immediately known how much money the government is considering injecting into the fund. Hyundai has invested 20 billion won (US$14.7 million) into the fund with the bank footing another 80 billion won. "Because it will be a business investment that reflects the purpose of the policy fund and not aimed at helping a particular company, it should not conflict with outstanding fair trade rules," a ministry official said. Under World Trade Organization rules, direct subsidies designed to help the auto industry or individual companies is prohibited as an unfair practice and could trigger trade disputes. The ministry, meanwhile, said that discussions are underway to exempt acquisition and corporate taxes if auto parts companies engage in mergers and acquisition deals. Tax breaks could allow the creation of larger companies in the parts industry, vital for sustained growth.
S. Korea aims to become more friendly to foreign residents By Shin Hae-in SEOUL, Dec. 11 (Yonhap) -- Sweeping measures will be implemented beginning next year aimed at making life easier for long-term foreign residents in South Korea, the prime minister's office said Thursday. Foreign residents who live far from district immigration offices will find it easier to apply for visas, report departures or handle other custom affairs via an expanded "immigration field service." The service, in which immigration officials visit foreigners living in remote regions, will be expanded to two to three times a week from the current one time per week. Twice as many foreigners are expected to befit from the expanded service, the prime minister's office said. Last year, over 54,400 cases were handled via the field service system. The government also plans to ease regulations on stock-buying for foreigners and foreign companies. Under current rules, foreigners must designate a South Korean citizen as an agent in order to become a major shareholder of local insurance companies. That regulation will be abolished. English-speaking foreign residents will also find it easier to use public transportation as buses, subways and trains will print and announce more stops in English beginning next year.
U.S. forces Korea to begin 'normal' three-year tours by early 2009: USFK chief SEOUL, Dec. 11 (Yonhap) -- U.S. troops coming to serve in South Korea under a decades-old joint defense pact will begin what the U.S. calls "normal" three-year family accompanied tours in 2009, Gen. Walter Sharp, chief of U.S. Forces Korea (USFK), said Thursday. Currently, over 80 percent of U.S. forces in Korea are on one-year family-unaccompanied tours. "We have asked for, and we have received approval from the office of Secretary of Defense" for three-year command-sponsored tours to South Korea, the USFK chief told reporters. The change will take place early next year, when the number of family-accompanied servicemembers will increase to 4,350 from the current 2,100, he said.
Top court strips lawmaker of seat with guilty verdict SEOUL, Dec. 11 (Yonhap) -- The Supreme Court on Thursday affirmed an appellate court's guilty verdict for an independent lawmaker on charges of defaming his rival candidate. Rep. Lee Moo-young was fined 3 million won (US$2,206) on charges of spreading false rumors against his rival in the run-up to the April parliamentary election. The ruling immediately stripped him of his seat. It is the first time a lawmaker has lost his seat in the 18th National Assembly. Lawmakers fined more than 1 million won for election law violation automatically lose their seat under the current law.
Bank of Korea Cuts Interest Rate to Record Low of 3% (Update1)
©2008 Bloomberg News
(Adds central bank statement in second paragraph.)
By William Sim
Dec. 11 (Bloomberg) -- The Bank of Korea cut its benchmark interest rate to a record low of 3 percent in an effort to prevent the global economic crisis from pushing the economy into its first recession since 1998.
Governor Lee Seong Tae and his board reduced the seven-day repurchase rate by 100 basis points, the most since the bank began to set a policy rate in 1999, in Seoul today. The economy will cool rapidly as export growth slows faster than expected, the bank said in a statement.
The won surged as much as 3.6 percent after the decision on optimism the central bank's action may help cushion the economy. Policy makers worldwide are reducing borrowing costs to fight a recession that's forcing Hynix Semiconductor Inc. and other companies to cut output and sack workers.
``More steps will be needed to limit the impact of the global economic and financial crisis on South Korea's economy,'' said Lim Ji Won, a senior economist at JPMorgan Chase & Co. in Seoul. The size of the reduction was a ``surprise,'' he said.
The won gained 2.2 percent to 1364 versus the dollar at 10:36 a.m. in Seoul.
Today's cut is the fourth reduction in eight weeks and marks the most aggressive round of easing since the central bank began setting a policy rate in 1999. None of the 16 economists surveyed by Bloomberg News forecast the size of the reduction.
The rate for smaller companies was lowered by 50 basis points to 1.75 percent.
The economy grew at the slowest pace in four years last quarter as exports dropped and consumer spending stagnated. The central bank may forecast the slowest economic growth in 11 years in its 2009 outlook due tomorrow, the Herald Business newspaper reported yesterday, without saying where it got the information.
World Bank
The World Bank said yesterday East Asia's economies face “hard times”, revising down its 2009 growth forecast for the region to 5.3 percent from the previously estimated 7.4 percent in April. International trade will shrink next year for the first time in more than 25 years, it said.
South Korea is pumping funds into banks, cutting taxes, boosting public spending and slashing borrowing costs to limit the fallout from the global credit crisis and recession, which sent the Korean won and stock index down by about 40 percent this year.
The Bank of Canada trimmed its benchmark rate by 75 basis points this week. The European Central Bank cut its main rate by the same margin to 2.5 percent on Dec. 4, the same day the Bank of England chopped its rate by one percentage point to 2 percent.
Governor Lee hinted at further cuts after reducing the benchmark to 4 percent on Nov. 7, saying his board is focused on “keeping the economy from weakening too much.”
Export Growth
South Korea's exports fell by the most in almost seven years last month as shipments to China, the nation's biggest overseas market, tumbled 27.8 percent.
South Korea's jobless rate climbed 3.3 percent in November, the highest since July 2007, as businesses cut workers to cope with the faltering economy.
“As the downturn in exports and domestic sales deepens, we expect firms to cut jobs further,” said Kwon Young Sun, an economist at Nomura International Ltd. in Hong Kong. “We expect employment to fall outright in 2009, for the first time in six years.''
Hynix Semiconductor, the world's second-largest computer memory chipmaker, said this week it'll eliminate 30 percent of its executives and slash labor costs by more than 15 percent.
Hyundai Motor Co. and other South Korean carmakers have cut production at home and abroad to cope with slowing demand. Posco, Asia's third-biggest steelmaker, is slashing planned output by about a third this quarter.
Consumer prices rose 4.5 percent in November, the smallest gain in seven months, providing the central bank room for further rate cuts. Inflation peaked at 5.9 percent in July.

(2nd LD) BOK cuts key rate to record low 3 pct By Kim Soo-yeonSEOUL, Dec. 11 (Yonhap) -- South Korea's central bank lowered its key interest rate by a record one percentage point on Thursday, the fourth rate cut in two months, in an effort to bolster the slowing economy. In a monthly policy meeting, the Bank of Korea (BOK) slashed the benchmark seven-day repo rate to a record low of 3 percent. The previous lowest level was 3.25 percent set in early November 2004.

Before Thursday's move, the BOK had cut the rate by a combined 1.25 percentage points to 4 percent since early October in a bid to keep global financial turmoil from impacting the real economy. The BOK also reduced the interest on its low-rate loans to commercial lenders by half a percentage point to 1.75 percent. It decided to expand its repurchase agreement deals with new 12 local securities firms to swiftly provide liquidity to the financial system. "The South Korean economy is slowing at a faster-than-expected pace as exports falter amid weak domestic demand," the BOK said in a statement. "The growth of the local economy is expected to sharply fall as domestic and overseas demand will likely deteriorate."The BOK said it will make efforts in managing its monetary policy to provide liquidity and to stem a severe economic slowdown. On the back of the steep rate cut, December treasury bond futures jumped 101 ticks to 110.67 as of 11:00 a.m. The local currency was trading at 1,362.05 won to the U.S. dollar, up 31.75 won from Wednesday's close. The move follows the government's unveiling of a string of measures aimed at jumpstarting the sagging economy, which include additional fiscal spending and tax cuts. "A full percentage point rate cut came as a surprise. The central bank seemed to act preemptively as economic growth for next year is widely expected to sharply slow," said Kim Jae-eun, an economist at Hana Daetoo Securities Co. "The BOK is expected to continue its monetary easing until the first quarter of next year."The South Korean economy grew 0.5 percent in the third quarter from three months earlier, the weakest growth in four years, as exports fell and domestic demand stagnated. Asia's fourth-largest economy is expected to further lose steam next year as exports, which account for about 60 percent of the economy, have already shown signs of slowing. The Korean economy grew 5 percent last year. South Korean overseas shipments declined 18.3 percent on-year in November, the biggest drop in seven years, as the global economic downturn dealt a blow to emerging markets like China, the main destination for Korean goods. International bodies and global investment banks have laid out a gloomy outlook for the Korean economy next year. The International Monetary Fund cut its growth prediction for the Korean economy to 2 percent in 2009 from 3.5 percent. UBS AG forecast that Korea's economy will contract 3 percent next year. But the outlooks are far below the government's 4-percent. Meanwhile, the country's consumer prices grew 4.5 percent on-year in November, the slowest growth in seven months, as oil and raw material prices declined. Experts said the BOK is expected to reduce borrowing costs until the first half of next year to cushion the impact of the global recession on the export-driven local economy. "Downside risk to economic growth is increasing, which also calls for aggressive economic stimulus packages from the government," said Im No-jung, an economist at Solomon Investment & Securities Co. "The BOK is expected to cut the rate down the road in a concerted effort to boost the economy."
Seoul shares up 0.42 pct in late morning SEOUL, Dec. 11 (Yonhap) -- South Korean shares rose 0.42 percent late Thursday morning on the central bank's drastic interest rate cut and overnight Wall Street gains, analysts said. The benchmark Korea Composite Stock Price Index (KOSPI) rose 4.82 points to 1,150.69 as of 11:20 a.m. "The key index remained in positive territory, helped by the central bank's larger-than-expected rate reduction and overnight U.S. gains," said Bae Sung-yung, an analyst at Hyundai Securities. Earlier in the day, the Bank of Korea reduced the benchmark interest rate by a record 1 percentage point to 3 percent in an effort to keep global financial turmoil from impacting the real economy. U.S. stocks also edged up Wednesday as price surges in commodities bolstered energy and material shares. The Dow Jones industrial average rose 0.81 percent and the tech-dominated Nasdaq composite index added 1.17 percent. The local currency was trading at 1,362.5 won to the U.S. dollar as of 11:20 a.m., up 31.3 won from Wednesday's close.
부실기업 선별착수..내년초 퇴출 가시화
(서울=연합뉴스) 금융팀 = 정부와 금융당국이 일시적 유동성 부족기업에 대해서는 지원하고 부실기업은 신속히 정리한다는 구조조정 방향을 제시함에 따라 채권금융기관 주도의 구조조정이 본격화되고 있다. 주요 은행의 거래 기업 5곳 중 한 곳은 요주의 대상이고 3분기에 제조업체 3곳 중 한 곳은 영업적자를 기록하고 있어 연말 결산이 끝나는 내년 초부터 퇴출 기업이 등장할 것으로 전망된다.
11일 금융업계에 따르면 은행들은 실물경기 침체로 인한 기업들의 경영 악화로 부실이 커지는 것을 막기 위해 거래기업을 업종별로 점검하는 등 구조조정 대상을 골라내는 작업에 착수했다. 국민은행은 기업에 대한 신규 자금 지원에 대비해 조만간 회계법인 등을 통해 영업 실적과 전망 등을 실사하고 필요하면 담보 제공이나 인적 구조조정, 보유 부동산 처분 등 자구책을 요구하기로 했다. 국민은행 관계자는 "실사 결과, 존속가치가 청산가치보다 크거나 사회적 기여도가 높으면 살리겠지만 그렇지 않으면 여신 지원을 중단할 수 밖에 없다"고 말했다. 국민은행은 거래 기업 가운데 신용등급이 B+ 이하인 요주의 대상이 15~20%로, 이 중에서 일부 퇴출 기업이 나올 것으로 예상하고 있다. 신한은행은 최근 기업금융개선지원본부를 설치해 건설업과 조선업, 해운업 등 3개 업종에 대한 특별관리에 들어갔다. 이 은행은 금융권의 신용공여액이 500억 원 미만인 7만 여개 거래업체를 대상으로 부채비율과 유동성비율 등을 점검하고 있으며 이중 일시적 자금난에 처한 기업에는 자금을 지원하기로 했다. 우리은행 등 다른 시중은행도 조만간 구조조정 전담 부서를 만들어 살릴 곳과 그렇지 않은 곳을 나눈 뒤 금융지원과 구조조정을 병행할 계획이다. 지난 9일 금융감독원이 구조조정 방향을 발표한 이후에 은행들의 발걸음이 빨라짐에 따라 기업들의 연말 결산을 기점으로 구조조정이 가시화할 것으로 보인다. 한국기업평가가 회사채 신용등급을 매기는 주로 중견 이상의 기업 326개 가운데 BB+ 이하의 투기등급은 24.8%(81개)에 달했으며 채무 불이행 상태에 빠진 곳은 5곳이다. 한국은행이 1천140여 개의 제조업체를 분석한 결과, 3분기에 영업이익으로 금융이자조차 감당하지 못하는 곳이 30.8%에 이르고 있다. 경기가 갈수록 나빠지고 있어 이런 적자기업은 더 늘어날 수밖에 없는 실정이다. 정부가 일시적 자금난을 겪는 기업은 최대한 살린다는 계획이지만 연말에 올 한해 영업실적 결산이 이뤄지면 한계기업이 수면 위로 부상하면서 구조조정이 불가피할 것으로 보인다. 은행들은 1차로 퇴출 기업이 나올 업종으로 건설과 조선업종을 꼽고 있다. 정부 관계자는 "감사원이 정부와 국책은행의 구조조정 업무에 면책제도를 도입하기로 한데 이어 금융감독원이 채권금융기관에도 비슷한 후속 조치를 검토하고 있어 기업의 옥석을 가리는 구조조정이 탄력을 받을 것"이라고 말했다.

North Korean Nuclear Talks May End After Deadlock, Envoy Says
©2008 Bloomberg News
By Heejin Koo
Dec. 11 (Bloomberg) -- Talks on dismantling North Korea’s nuclear program may end today after the communist nation rejected proposals on verifying the extent of its arsenal, including a plan to take samples from a reactor.
“I came to say goodbye,” South Korea’s chief negotiator, Ambassador Kim Sook, told reporters in Beijing today before heading to the fourth day of negotiations.
North Korea rejected proposals agreed by the U.S., China, South Korea, Japan and Russia, envoys at the talks said yesterday. China’s draft included a clause specifying international inspectors be allowed to remove soil and waste samples from North Korea’s Yongbyon reactor to determine how much weapons-grade plutonium it produced.
“The North Koreans don’t want to put into writing what they put into words,” Assistant Secretary of State Christopher Hill, the U.S. chief negotiator, said today. “It’s not up to us to be bargaining, it’s up to the North Koreans to do what they said they would do.”
The talks, hosted by Chinese officials in Beijing, were intended to establish verification procedures, provide a schedule for disablement of the Yongbyon facility and plan the delivery of energy aid to North Korea.
Chinese Foreign Minister Yang Jiechi called a meeting today of the envoys to discuss the impasse at the talks, which started on Dec. 8, South Korean officials said.
Stalled Agreement
Kim Jong Il’s government indicated last month it won’t allow sampling, stalling the implementation of a disarmament agreement reached in February 2007. Hill said previously that sampling is “the core focus” of efforts to verify North Korea’s disclosures about its atomic work.
State Department spokesman Sean McCormack rejected criticism the U.S. gave up valuable leverage when it removed North Korea from its list of state sponsors of terrorism in October in exchange for agreeing to certain verification details, including the sampling that the North Koreans rejected yesterday.
“We had a thorough understanding and very precise understanding of what was agreed to, and we had that on paper ourselves,” McCormack told reporters in Washington today.
The U.S. still has a lengthy list of sanctions against North Korea and the communist nation must choose whether to move forward to improve relations or risk continued isolation, McCormack said.
“Whether or not the North Korean regime decides that those incentives and those possible benefits are worth changing their behavior is a calculation only they can make,” McCormack said.
Aid for Disarmament
Under the 2007 accord, North Korea, which tested a nuclear weapon in 2006, agreed to scrap its atomic program in return for normal diplomatic relations with the U.S. and Japan, along with energy aid equivalent to 1 million tons of heavy fuel oil.
“The United States has long said that we will never accept North Korea as a nuclear power,” Pentagon spokesman Major Stewart Upton said.
North Korea, officially known as the Democratic People’s Republic of Korea, accused the U.S. of building up arms in the area, citing reports by South Korean media last month that the Pentagon is mulling the deployment of three squadrons of F-22 jet fighters in the Asia-Pacific region.
“The bellicose U.S. forces are escalating their moves for a pre-emptive attack on the DPRK behind the scenes of the six- party talks, thus gravely threatening peace and stability in Northeast Asia, including the Korean peninsula and exacerbating the tension there,” the communist regime’s official Korea Central News Agency said.

(2nd LD) Envoys struggle to save stalled talks By Lee Chi-dongBEIJING, Dec. 11 (Yonhap) -- Veteran negotiators at this week's six-way talks on North Korea's nuclear program risked going back home without a deal Thursday in what is likely the last chance for the Bush administration to save a troubled aid-for-denuclearization agreement signed last year. The negotiators gathered at Daioyutai State Guest House in Beijing for the fourth day of discussions. Some bilateral meetings continued but no breakthrough was reported. Whether the talks will continue remains unclear. "Nobody knows," Yuri Kim, a U.S. State Department official participating in the negotiations told Yonhap News Agency at Daioyutai, as the chief delegates from the U.S., China, Russia, Japan, and the two Koreas held a tea meeting with Chinese Foreign Minister Yang Jiechi. "The six-party talks are an important mechanism for resolving the North Korean nuclear program and establishing peace in the region," the minister said through an interpreter at the beginning of the meeting. South Korean delegates also refused to predict how the deadlocked talks will proceed. "It is in a complete haze," one delegate said. He added, however, that it would be difficult to produce a deal given wide differences between Pyongyang and the other parties over the main agenda item -- whether North Korea will allow international inspectors to take samples from soil and waste at its nuclear sites for analysis at foreign laboratories. The U.S. says sampling is crucial in verifying the accuracy of the North's June declaration of its nuclear inventory. "Obviously we would like to see progress made on this verification protocol, and so far we haven't seen that," top U.S. nuclear envoy Christopher Hill told reporters earlier in the day. "The North Koreans don't want to put into writing what they are willing to put into words."North Korea, which conducted an underground nuclear test in 2006, reiterated its claim that it is a nuclear state, Hill said, although the international community does not recognize it as such. Documenting detailed verification methods is a key goal in this week's six-way talks. A stalemate on the verification issue will also affect negotiations on the other main agenda items, which include a timetable for completing the North's disabling of its Yongbyon nuclear reactor and the delivery of energy aid by its dialogue partners. South Korea said it has pushed for a package deal.

S. Korea must enact more stimulus measures for 2009, experts say SEOUL, Dec. 11 (Yonhap) -- South Korea's government should swiftly craft more economic stimulus packages for next year to prevent the nation's economy from sinking into a recession for the first time in a decade, experts said Thursday. Hit by the worldwide recession, South Korea's economy has been in dire straits, with exports rapidly sliding and growth in corporate investment and domestic consumption coming to a standstill. Analysts have presented mixed outlooks, with some foreign investment banks predicting the economy will contract next year. The International Monetary Fund recently forecast that South Korea's economy may grow two percent next year, a sharp reversal from a five percent expansion in 2007. The government of President Lee Myung-bak has unveiled 36.5 trillion won (US$27.6 billion), or 3.8 percent of its gross domestic product, in tax cuts and supplementary fiscal budgets this year in an effort to prop up the economy. Analysts, however, say the government needs to do more because the size of the stimulus package was smaller than those of other major economies and most of the benefits are aimed at the construction industry. Earlier in the day, the Bank of Korea cut its key interest rate by an unprecedented 100 basis points to three percent in what many analysts say is a necessary step to keep the economy from plunging into recession. "Further steps are urgently needed to stimulate the economy by boosting domestic demand," said Heo Chan-kook, a senior research fellow at the Korea Economic Research Institute, in a forum hosted by the Federation of Korean Industries. He predicted South Korea's economy would grow 2.4 percent next year with private consumption contracting 0.2 percent. South Korea's economy has long relied on exports to fuel its economic growth, particularly its auto, semiconductor and shipbuilding industries. As the global economy is faltering, the nation's export juggernauts, including Samsung Electronics Co. and Hyundai Motor Co., are increasingly feeling the pinch. Hyundai Motor, the world's fifth-largest automaker, is slashing its output at home and overseas by idling some production lines to reduce inventories. But the worst may be yet to come. "In 2009, advanced economies will shrink and emerging markets will face the worst downturn since 2001," said Citibank Korea economist Oh Suk-tae at the forum. Oh expected the global economic downturn to last until 2010, calling on the South Korean government to draw up more measures to expand fiscal spending and liquidity supply. Whether Thursday's record rate cut by the Bank of Korea will do any good for the economy remains to be seen. "It certainly won't harm the economy. But the big fall in rates is unlikely to be a major stimulus to new investment," said Daniel Melser, a senior economist at Moody's Economy.com, in a report. The key to avoiding recession will not actually be the level of interest rates but instead the size and success of government stimulus packages, Melser said. "Today's massive rate cut has seen the Bank of Korea pass the ball firmly to President Lee Myung-bak to do his part to support the economy," Melser said.
BOK pays interest on local banks' required reserves SEOUL, Dec. 11 (Yonhap) -- The Bank of Korea (BOK) on Thursday paid local banks about 500 billion won (US$372 million) in interest on their required reserves at the central bank in an effort to help ease a credit crunch. "A total of 500.2 billion won in interest was paid to them as part of efforts to help assuage the credit squeeze," the BOK said in a statement. Last week, the BOK decided to make a one-off interest payment on the reserves to local lenders for the first time since December 1986. Currently, the reserve requirement ratio on money market deposit accounts and demand deposits stood at 7 percent. The reserve ratio refers to the percentage of customer deposits that banks are required to set aside in cash. If the central bank cuts the ratio, local commercial banks will have more room in handing out loans. The move came as South Korean banks have been increasingly reluctant to extend loans, particularly to smaller firms, amid the slowing economy and a credit crunch. Despite a round of rate cuts by the BOK, market interest rates like yields on certificate of deposits have not fallen as much as expected, deepening liquidity strains on the financial system. Earlier in the day, the BOK cut the benchmark interest rate by a record one percentage point to an all-time low of 3 percent in an effort to bolster the slowing economy.
Seoul shares end up 0.75 pct on rate cut SEOUL, Dec. 11 (Yonhap) -- South Korean shares closed 0.75 percent higher Thursday as investor sentiment was boosted by an interest rate cut, analysts said. The local currency surged against the U.S. dollar. The benchmark Korea Composite Stock Price Index (KOSPI) climbed 8.56 points to 1,154.43. Volume was heavy at 563.6 million shares worth 7.83 trillion won (US$5.76 billion), with gainers outpacing losers 551 to 305. "The central bank's larger-than-expected rate reduction and a local currency gain helped raise the key index, though in a limited way, as they are expected to relieve liquidity jitters," said Bae Sung-yung, an analyst at Hyundai Securities. Earlier in the day, the Bank of Korea slashed the benchmark interest rate by a record 1 percentage point to 3 percent in a bid to prop up the slowing economy. Construction shares led the overall gain as lower interest rates are expected to boost domestic demand. Doosan Construction & Engineering jumped 5.80 percent to 5,110 won and leading builder GS Engineering & Construction added 6.03 percent to end at 61,500 won. IT shares gathered ground with Samsung Electronics rising 0.31 percent to 482,500 won and LG Electronics adding 4.69 percent to end at 84,800 won. Carmakers, however, were dented amid a bleak demand outlook. Top automaker Hyundai Motor lost 1.59 percent to 46,300 won and its affiliate Kia Motors shed 1.6 percent to end at 7,390 won. The local currency ended at 1,358.4 won to the dollar, up 35.4 won from Wednesday's close, as overseas investors purchased the won to pick up local stocks, dealers said.
Canadian firm to sell smartphones in S. Korea SEOUL, Dec. 11 (Yonhap) -- A major Canadian handset maker plans to begin selling one of its most popular smartphone models to South Korea businesses later this month, a local mobile carrier said Thursday. Research in Motion (RIM) Ltd. plans to start selling the BlackBerry Bold 9000 model to corporations starting on Dec. 29, SK Telecom, RIM's local wireless partner, said in a statement. The two companies plan to hold a launch party next week in Seoul. The BlackBerry brand, first introduced in 2002, is popular among businesses in North America and Europe as it allows users to access closed corporate e-mail servers through a special software package. The device will sell for around 800,000 won (US$596) per unit. SK Telecom also said it is reviewing the viability of marketing the model to retail consumers starting in April 2009, when South Korea will remove a regulation that requires locally sold handsets to be equipped with special Web software. On Wednesday, South Korea's telecom regulator said it will scrap the wireless Internet platform for interoperability, or WIPI, installation requirement starting in April. Additional software installation costs were seen as a major hurdle for foreign mobile brands looking to enter the South Korean market.
French minister cautions against U.S. missile defense system By Kim BoramSEOUL, Dec. 11 (Yonhap) -- The United States' missile defense system should not be expanded to a level where it can be seen as a threat to Russia, as that would cause unnecessary conflicts that could also affect other European nations, a French minister said Thursday. "We must not provoke Russia by thoughtlessly expanding the North Atlantic Treaty Organization (NATO) or the missile defense system," said Jean-Marie Bockel, France's minister of state for defense and veterans affairs. A minister of state in France is a politician or official assigned to assist a Cabinet minister on specific tasks, according to an official at the French embassy here. Bockel, generally referred to as the veterans affairs minister, arrived here earlier in the week along with a group of French veterans of the Korean War who are traveling here on a special tour program run by Seoul. The French minister said that his country and the United States need each other as they continue to be strong allies in the NATO, but noted the countries may occasionally disagree. "France and the United States have many similarities in terms of the values they pursue, but their goals and means to reach those goals can sometimes be different," Bockel said at a security forum here, organized by a private think tank, Security Management Institute. "The missile defense system is only a partial defense against ballistic missiles," he added, referring to the multi-billion dollar project pursued by the United States, which Washington claims will be able to intercept most incoming missile attacks. Bockel said the two nations should instead focus on stopping the proliferation of weapons of mass destruction by increasing support for activities by existing non-proliferation regimes, such as the United Nations. Turning to the North Korean nuclear issue, the French official said the six-nation talks on ending North Korea's nuclear ambitions will continue to have "ups and downs," but that the countries involved will eventually prevail in winning concession from the communist state. "France, as South Korea's ally and friend, anticipates the six-party talks will come to a peaceful and satisfactory end and that Korea will be able to promote its national interest through the multilateral negotiation process," Bockel said through his Korean interpreter.
(2nd LD) Top court strips two lawmakers of seats for violating election law By Kim HyunSEOUL, Dec. 11 (Yonhap) -- The Supreme Court stripped two lawmakers of their seats on Thursday for violations during the parliamentary election race in what could be a preview of the fate of dozens of other lawmakers on trial. Rep. Lee Moo-young, an independent, and Rep. Lee Han-jung of the minor opposition Renewal of Korea Party were the first to lose their seats among more than 30 lawmakers standing trial for violating the election law. Lee Moo-young automatically lost his seat when the top court affirmed an appeals court verdict that fined him 3 million won (US$2,206) for spreading false rumors against his rival in the run-up to the April vote. A jail term or a fine of more than 1 million won immediately nullifies a parliamentary seat according to the election law. In a television debate weeks before the vote, Lee argued that his rival of the Democratic Party, Chang Young-dal, "was put in jail for seven years not because he engaged in democracy movement but because he raised the theory of South Korea's invasion of the North" as the cause of the Korean War. The top court upheld a guilty verdict by the appeals court, saying, "Even though Rep. Lee claims that it was a slip of the tongue, considering he made the remarks repetitively, it seems evident that he had an intention to deal a blow to Chang."The court also stripped Lee Han-jung of the Renewal of Korea Party of his seat, ruling in favor of his party, which sought to oust him for his criminal record. The fledgling party sued Lee after it discovered he had covered up a slew of criminal convictions and misrepresented his academic credentials. "Should the Renewal of Korea Party have known Mr. Lee Han-jung had criminal records that had put him in jail, it would not have named him as its proportional candidate," Justice Park Si-hwan said in the verdict. Under South Korean election law, each political party is alloted non-regional seats according to the proportion of nationwide votes they receive, in addition to their regional seats. The proportional system aims to increase the presence of minorities such as women and the disabled in the legislature. Applying for a proportional seat with the Renewal of Korea party, Lee also handed over 600 million won to the party to fund its election campaign. The party chairman, Rep. Moon Kook-hyun, received a suspended jail term last week for accepting the money. Court trials are underway for 32 other lawmakers accused of violating the election law. Twelve more may lose their seats if the top court uphold guilty verdicts issued by the appeals court. With Thursday's verdicts, the number of assembly seats has been reduced to 297.
Lee, Aso, Wen to meet in Fukuoka over financial crisis By Yoo Cheong-moSEOUL, Dec. 11 (Yonhap) -- South Korea, China and Japan plan to adopt a joint statement on closer trilateral cooperation in overcoming the global financial crisis and denuclearizing North Korea after their leaders hold a summit in the Japanese city of Fukuoka this weekend, South Korea's presidential office Cheong Wa Dae said Thursday. "The joint statement to be signed by South Korean President Lee Myung-bak, Japanese Prime Minister Taro Aso and Chinese Premier Wen Jiabao at their meeting in Fukuoka will call for forming a three-way partnership relationship," a top Cheong Wa Dae official said on condition of anonymity. "The three leaders will also discuss expanding foreign currency swap deals among the three countries and accelerating a recent agreement with Southeast Asian countries to create an US$80 billion joint fund by next June to fight a regional financial crisis," said the official. The summit will be held on Saturday. He noted the three leaders will also sign an accord on disaster cooperation before holding joint meetings with youth representatives and reporters from the three countries. Prior to the three-way meeting, Lee will separately meet with Aso and Wen for discussions on pending bilateral issues, including closer cooperation on the global economic crisis, the official said. The Fukuoka meeting will be the first three-way summit talks to be held separately from multilateral international forums. The three countries have met annually on the sidelines of the Association of Southeast Asian Nations Plus Three summit. The three countries had originally intended to meet in Japan in September, but the plan was scrapped due to the sudden resignation of then Japanese Prime Minister Yasuo Fukuda. A Japanese newspaper reported earlier on Thursday that Seoul and Tokyo are scheduled to sign a deal in Fukuoka to expand the ceiling of their foreign currency credit swap line from the current $13 billion to $30 billion. But the Cheong Wa Dae official said it is too early to mention the conclusion of a new currency swap line deal between South Korea and Japan, noting the issue will be finalized at the Fukuoka summit. South Korea, faced with a weakening won and declining foreign exchange reserves, has long sought to expand its foreign currency swap lines with Japan and China.
N. Korea will never be called a nuclear state: defense minister By Byun Duk-kunSEOUL, Dec. 11 (Yonhap) -- North Korea will never be recognized as a nuclear state despite its continued ambitions, as the term only refers to nations who already possessed nuclear capabilities when an international non-proliferation treaty was adopted, South Korea's defense minister said Thursday. The remarks come one day after a report by the U.S. Joint Forces Command categorized the communist North as one of five nuclear powers in Asia, along with China, Russia, India and Pakistan. The U.S. State Department has dismissed the categorization as a simple mistake, saying, "That is not our national policy. And the document they referenced does not represent the official views of the United States."Defense Minister Lee Sang-hee, however, noted Pyongyang may try use Washington's mistake to its advantage and promote itself as a nuclear power. "The most important issue in dealing with the North Korean issue is to completely verify their past and current nuclear activities," Lee said while meeting with senior political editors from the country's major news outlets, including Yonhap. "Regardless of whether the North is or is not a nuclear state, the military is taking every measure to be fully prepared for any type of aggression," he added. North Korea conducted its first nuclear test two years ago, but both Seoul and Washington refuse to recognize the communist nation as a nuclear power, saying the 2006 test was only a partial success. The controversy is expected to grow as U.S. Defense Secretary Robert Gates, who will stay on as defense chief under the incoming Obama administration, recently said North Korea may already possess several nuclear bombs. In an article published in the latest edition of the U.S. magazine Foreign Affairs, Gates said North Korea "has built several bombs, and Iran seeks to join the nuclear club."Seoul and Washington have so far only said the communist nation is believed to have produced enough plutonium to produce several nuclear weapons, but that there is no way to confirm whether the North has in fact produced any nuclear bombs.
China works to narrow differences at six-way talks By Lee Chi-dongBEIJING, Dec. 11 (Yonhap) -- China said Thursday that it was still trying to narrow differences among parties in the six-way talks on the North Korean nuclear program. "The talks are still under way," Foreign Ministry spokesman Qin Gang said in a press conference. "Each party is making efforts to reach a common understanding."This week's talks were initially scheduled to end on Wednesday but were extended into Thursday after Pyongyang refused to accept a demand by the U.S. and its allies to allow international inspectors to take samples from its nuclear facilities to verify its recent nuclear claims. A South Korean delegate said that China, which chairs the negotiations, was working on a document to sum up the results of the talks. "I think the talks will end today anyway," he said on condition of anonymity.
(4th LD) BOK cuts key rate to record low 3 pct By Kim Soo-yeonSEOUL, Dec. 11 (Yonhap) -- South Korea's central bank lowered its key interest rate by a record one percentage point on Thursday, citing sharply cooling economic growth, and hinted it could take more steps to bolster the slowing economy and ease a credit crunch. In a monthly policy meeting, the Bank of Korea (BOK) slashed the benchmark seven-day repo rate to a record low of 3 percent, marking the fourth rate cut in two months. The previous lowest level was 3.25 percent set in early November 2004. The BOK has trimmed the rate by a combined 2.25 percentage points from 5.25 percent since early October in an effort to keep global financial turmoil from impacting the real economy. "The growth of the South Korean economy will sharply slow for a considerable period of time as exports will likely lose steam amid the global slump," BOK Gov. Lee Seong-tae told a press conference. "A possibility (for more rate cuts) is always open," he said, adding that the BOK will use its policy tools to provide liquidity and to stabilize the financial markets. Along with the policy rate cut, the BOK reduced the interest on low-rate loans to commercial lenders by half a percentage point to 1.75 percent. It also decided to allow an additional 12 local securities firms to participate in its repurchase agreement operations to swiftly provide liquidity to the financial system. "The BOK is considering offering liquidity to specific financial sectors if they are suffering from cash shortages," Lee said, adding that more contingency plans could be in the cards should a severe liquidity crunch emerge. On the back of the rate cut, the key stock index closed up 0.75 percent to 1,154.43. The local currency closed at 1,358.5 won to the U.S. dollar, up 2.6 percent from Wednesday's close. The return on three-year Treasuries fell 0.2 percentage point to 4.01 percent and the benchmark yield on five-year government bonds declined 0.08 percentage point to 4.44 percent. The move comes as the government has unveiled a raft of economic stimulus measures including additional fiscal spending and tax cuts. "A full percentage point rate cut came as a surprise. The central bank seemed to try to act preemptively as economic growth for next year is widely expected to markedly slow," said Kim Jae-eun, an economist at Hana Daetoo Securities Co. The South Korean economy grew 0.5 percent in the third quarter from three months earlier, the weakest growth in four years, as exports fell and domestic demand stagnated. Asia's fourth-largest economy is expected to further lose steam next year as exports, which account for about 60 percent of the economy, have already shown signs of slowing. The Korean economy grew 5 percent last year. South Korean overseas shipments declined 18.3 percent on-year in November, the biggest drop in seven years, as the global economic downturn dealt a blow to emerging markets like China, the main destination for Korean goods. International bodies and global investment banks have projected a gloomy outlook for the Korean economy next year. The International Monetary Fund cut its growth prediction for the Korean economy to 2 percent in 2009 from 3.5 percent. UBS AG forecast that Korea's economy would contract 3 percent next year. Both predictions fall below the government's target growth rate of 4 percent. Meanwhile, the country's consumer prices grew 4.5 percent on-year in November, the slowest in seven months, on falling oil prices. Experts said the BOK is expected to reduce borrowing costs to cushion the impact of the global recession on the export-driven local economy and would do more actions to provide liquidity to ease strains in the financial markets. "I think there is room for the BOK to continue its monetary easing probably to around 2 percent until the first half of next year, given deteriorating economic activities," said Lee Sung-kwon, an economist at Goodmorning Shinhan Securities Co. "Along with the monetary easing, the BOK will likely take more steps to pump liquidity into targeted areas."Jeon Hyo-chan, an economist at Samsung Economic Research Institute, said additional rate cuts cannot be excluded, but a steep cut like one seen today would not be easy.


기준금리 1%P 충격인하..사상 최대폭(종합2보)
연 3.00%로 낮춰..사상 최저 수준금통위, 추가 금리인하 가능성 시사(서울=연합뉴스) 윤근영 기자= 한국은행은 11일 기준금리를 현행 4.00%에서 3.00%로 1.00%포인트 내린다고 발표했다. 또 총액한도대출 금리를 현행 연 2.25%에서 1.75%로 낮췄다. South Korea’s central bank lowered its key interest rate by a record one percentage point on Thursday, citing sharply cooling economic growth, and hinted it could take more steps to bolster the slowing economy and ease a credit crunch. 한은은 이날 오전 정례 금융통화위원회에서 이렇게 결정했다고 밝혔다.
한은은 5.25%였던 기준금리를 지난 10월 9일 5.0%로 내린데 이어 같은 달 28일에는 4.25%로 0.75% 포인트나 파격적으로 인하했고 지난달 7일에는 4.00%로 낮췄다. The Bank of Korea slashed its key interest rate by 25 basis point to 5.0 percent in Oct.9th, 75 basis point to 4.25 percent in 28th of the same month and another 25 basis point cut to 4.00 percent as of Nov.7th. 기준금리 3.00%는 역대 최저치인 3.25%(2004년 11월11일)보다 0.25%포인트나 낮은 것이다. 통화정책이 통화량에서 기준금리로 바뀐 1999년 이후에 기준금리가 3.0%로 내려간 적은 한번도 없었다.
The key interest rate of 3 percent is the lowest ever since Nov.11 2004, when 3.25 percent was recorded. 또 그동안 한은이 1.00%포인트의 큰 폭으로 기준금리를 내린 사례는 없었다. 이번 금리인하는 경기의 빠른 하강을 막고 자금경색을 풀어주기 위한 것이다.In a monthly policy meeting, the Bank of Korea slashed the benchmark seven day repo rate to a record low of 3 percent, marking the fourth rate cut in two months. The previous lowest level was 3.25 percent set in early November 2004. The BOK has trimmed the rate by a combined 2.25 percentage points from 5.25 percent since early October in an effort to keep global financial turmoil from impacting the real economy. The growth of the S.Korean economy will sharply slow for a considerable period of time as exports will likely lose steam amid the global slump. Along with the policy rate cut, the BOK reduced the interest on low rate loans to commercial lenders by half a percentage point to 1.75 percent. It also decided to allow 부동산 가격이 급락할 가능성이 있다는 점도 금리인하의 배경으로 해석되고 있다. 두바이유 가격이 배럴당 40달러 아래로 내려오는 등 국제유가가 안정되면서 소비자물가 상승률이 빠르게 둔화되고 있는 점도 한은의 금리인하 폭을 확대했다. 한은 금통위는 통화정책방향 결정문에서 금리인하 배경에 대해 "국내경기는 소비, 투자 등 내수부진이 심화되는데다 수출도 감소로 돌아서면서 빠르게 둔화되고 있다"면서 "신용경색 등 금융시장 불안과 함께 세계경제의 침체로 향후 성장이 크게 위축될 가능성이 있는 것으로 판단된다"고 밝혔다. 금통위는 이어 "앞으로 유동성 상황을 개선하고 경기의 과도한 위축을 방지하는데 주안점을 둬 운용할 것"이라고 밝혀 추가 금리 인하 가능성을 시사했다. 경제 전문가들은 한은이 기준금리를 내년 상반기에 2.5%까지 내릴 가능성이 있는 것으로 내다보고 있다. 한은은 또 금융시장에 유동성을 충분히 공급하기 위해 환매조건부(RP) 거래 대상 기관에 통안증권 경쟁입찰 및 증권매매 대상 12개 증권사도 포함시키기로 했다. 한은은 이들 증권사로부터 추가 신청을 받아 거래대상 기관으로 정할 계획이다. 해당 증권사는 굿모닝신한증권, 대우증권, 동양종합금융증권, 대신증권, 삼성증권, 현대증권 등 대부분의 증권사들이 포함되며 우리투자증권은 이미 거래대상 기관으로 선정돼 있다.

(4th LD) BOK cuts key rate to record low 3 pct By Kim Soo-yeonSEOUL, Dec. 11 (Yonhap) -- South Korea's central bank lowered its key interest rate by a record one percentage point on Thursday, citing sharply cooling economic growth, and hinted it could take more steps to bolster the slowing economy and ease a credit crunch. In a monthly policy meeting, the Bank of Korea (BOK) slashed the benchmark seven-day repo rate to a record low of 3 percent, marking the fourth rate cut in two months. The previous lowest level was 3.25 percent set in early November 2004. The BOK has trimmed the rate by a combined 2.25 percentage points from 5.25 percent since early October in an effort to keep global financial turmoil from impacting the real economy. "The growth of the South Korean economy will sharply slow for a considerable period of time as exports will likely lose steam amid the global slump," BOK Gov. Lee Seong-tae told a press conference. "A possibility (for more rate cuts) is always open," he said, adding that the BOK will use its policy tools to provide liquidity and to stabilize the financial markets. Along with the policy rate cut, the BOK reduced the interest on low-rate loans to commercial lenders by half a percentage point to 1.75 percent. It also decided to allow an additional 12 local securities firms to participate in its repurchase agreement operations to swiftly provide liquidity to the financial system. "The BOK is considering offering liquidity to specific financial sectors if they are suffering from cash shortages," Lee said, adding that more contingency plans could be in the cards should a severe liquidity crunch emerge. On the back of the rate cut, the key stock index closed up 0.75 percent to 1,154.43. The local currency closed at 1,358.5 won to the U.S. dollar, up 2.6 percent from Wednesday's close. The return on three-year Treasuries fell 0.2 percentage point to 4.01 percent and the benchmark yield on five-year government bonds declined 0.08 percentage point to 4.44 percent. The move comes as the government has unveiled a raft of economic stimulus measures including additional fiscal spending and tax cuts. "A full percentage point rate cut came as a surprise. The central bank seemed to try to act preemptively as economic growth for next year is widely expected to markedly slow," said Kim Jae-eun, an economist at Hana Daetoo Securities Co. The South Korean economy grew 0.5 percent in the third quarter from three months earlier, the weakest growth in four years, as exports fell and domestic demand stagnated. Asia's fourth-largest economy is expected to further lose steam next year as exports, which account for about 60 percent of the economy, have already shown signs of slowing. The Korean economy grew 5 percent last year. South Korean overseas shipments declined 18.3 percent on-year in November, the biggest drop in seven years, as the global economic downturn dealt a blow to emerging markets like China, the main destination for Korean goods. International bodies and global investment banks have projected a gloomy outlook for the Korean economy next year. The International Monetary Fund cut its growth prediction for the Korean economy to 2 percent in 2009 from 3.5 percent. UBS AG forecast that Korea's economy would contract 3 percent next year. Both predictions fall below the government's target growth rate of 4 percent. Meanwhile, the country's consumer prices grew 4.5 percent on-year in November, the slowest in seven months, on falling oil prices. Experts said the BOK is expected to reduce borrowing costs to cushion the impact of the global recession on the export-driven local economy and would do more actions to provide liquidity to ease strains in the financial markets. "I think there is room for the BOK to continue its monetary easing probably to around 2 percent until the first half of next year, given deteriorating economic activities," said Lee Sung-kwon, an economist at Goodmorning Shinhan Securities Co. "Along with the monetary easing, the BOK will likely take more steps to pump liquidity into targeted areas."Jeon Hyo-chan, an economist at Samsung Economic Research Institute, said additional rate cuts cannot be excluded, but a steep cut like one seen today would not be easy.

North Korea bans internet cafes
Jul 11, 2007 1:38 PM North Korea's security agency has ordered the shutdown of karaoke bars and internet cafes, saying they are a threat to society, a South Korean newspaper reported.
Refugees from the reclusive state say such outlets are largely located in the northern region that borders China and are frequented by merchants involved in cross-border business rather than ordinary citizens.
The North's Ministry of People's Security said in a directive that all karaoke bars, video-screening rooms and internet cafes operating without state authorisation must shut immediately, the Dong-A Ilbo newspaper said.
The paper did not say how it obtained a copy of the directive.
"It is so promulgated under the mandate of the Republic in order to crush enemy scheming and to squarely confront those who threaten the maintenance of the socialist system," the daily quoted the ministry directive as saying.
"Most of the people who would go to these places are people who made quite a bit of money, normally not officials or the average person," said Park Sang-hak, an activist for human rights in the North based in South Korea.
Source: Reuters

이성태 한은총재 "추가 금리인하 가능성 있다"(종합)
"현재 경기 상황이 매우 안좋은 상황에서 사상 최저 금리로 가는 것이 당연하다. 상황이 나빠지면 (추가금리 인하) 가능성은 열려 있다." 이성태 한국은행 총재는 11일 금융통화위원회 회의를 갖고 기준금리를 1%p 낮춰 연 3.00%로 결정한 것과 관련 기자브리핑에서 "추가 기준금리 인하 가능성은 항상 열려 있다"며 이같이 밝혔다.이 총재는 "정책 하는 사람들은 가능성은 항상 열어둔다"며 "이 자리에서 그 가능성을 닫아두는 발언을 할 수는 없고 과연 우리나라에서 어느정도의 금리가 적절하냐는 것은 나라의 형편을 봐서 정해야하는 문제지 다른 나라의 것을 무턱대고 따라갈 필요는 없다고 본다"고 말했다. 그는 이어 "앞으로 세계경제가 지금 생각보다 더 나빠지고 한국경제가 더 나빠진다면 한은이 기준금리를 어떻게 대응할 것인가애 따라 항상 (추가 인하)가능성은 열려 있다"고 덧붙였다.이 총재는 "통상적인 3~5년 경기 사이클보다 현재 사이클이 더 깊다"며 "이같은 상황에서 사상 최저 금리로 가는 것은 당연하다"고 말했다. 그는 이어 "국제 금융시장에서의 자금 인출로 국내 유동성이 줄어들고 환율은 올라가는 등 금융의 상황이 좋지 않고 실물에서 오는 상황도 근래에 찾아보기 어려울 정도로 안좋다"며 "유동성 함정에 빠지기 전까지 최저 금리로 갈 수 있다"고 말했다.

한은은 이날 기준금리를 사상 최대 인하폭인 1%p를 내려 연 3.00%로 결정한 것은 국내 경기의 내수부진 심화와 향후 성장이 크게 위축될 가능성이 높다고 판단했기 때문이라고 설명했다.이 총재는 "최근 국내경기는 내수부진이 지속되는 가운데 그동안 호조를 보였던 수출도 증가율이 마이너스로 반전하면서 예상보다 가파르게 둔화되는 모습"이라며 "생산면에도 제조업과 서비스업 모두 부진했다"고 진단했다.그는 이어 "소비자물가는 지난 7월 5.9% 이후 오름세가 둔화되고 있으나 석유류 등을 제외한 근원물가는 오름세를 지속했다"면서 "아파트매매 가격은 하락폭이 다소 확대됐다"고 설명했다. 한은이 이날 발표한 '최근의 국내외 경제동향'에 따르면 11월 소비자 물가는 4.5%로 전월대비 0.3%p 하락한 반면 근원플레이션은 전년 동월대비 5.3%로 상승했다.이 총재는 "경상수지는 상품수지가 흑자로 돌아서고 서비스수지도 적자규모가 줄어듦에 따라 개선 추세"라며 "향후 우리 경제는 국내외 금융 및 실물경제여건이 악화되면서 내외수요 부진이 심화됨에 따라 성장 감속이 빠르게 진행될 것"이라고 내다봤다. 한경닷컴 박세환 기자 greg@hankyung.com
Korea Won, Bonds Rally as Central Bank Cuts Rates to Record Low
©2008 Bloomberg News
By Kim Kyoungwha
Dec. 11 (Bloomberg) -- South Korea’s won and government bonds rallied after the central bank cut its benchmark interest rate to a record low to prevent the economy from slipping into its first recession since 1998.
The currency soared to a one-month high and five-year yields dropped to the lowest since 2005 after Governor Lee Seong Tae and his board reduced the seven-day repurchase rate by 1 percentage point to 3 percent in Seoul today, the least since the bank began to set a policy rate in 1999.
“It’s a preemptive strike to guard against a recession,” said Hong Sung Koo, a bond fund manager with Daishin Securities Co. in Seoul. “The aggressive move will give a helping hand to markets reeling from the worsening prospects for the economy.”
The won rose as much as 4 percent from yesterday to 1,338.55 per dollar, before trading at 1,340.70 as of 12:48 p.m. in Seoul, according to Seoul Money Brokerage Services Ltd. Stocks rose 1.2 percent to 1,159.92.
The currency also rose for a fifth day, putting it on course for the biggest weekly advance in six weeks, after the People’s Bank of China said yesterday China, South Korea and Japan agreed to meet in 2009, starting regular consultations to ensure currency stability in Asia. The won is down 30 percent this year, Asia’s worst performer among the 10 most-traded regional currencies outside Japan.
“There are some hopes that sentiment for Korea is turning around with foreign investors increasing stock purchases,” said Lee Myung Hoon, a currency dealer with state-run Industrial Bank of Korea in Seoul. “It’s also positive that Korea can expand swaps further with Japan and China.”
Global funds bought more Korean shares than they sold for a fourth day, according to Korea Exchange.
Swap Agreement
The agreement comes ahead of this week’s summit among leaders of the three nations in Japan to discuss cooperation on overcoming the financial crisis. A slumping won this year has put pressure on President Lee Myung Bak to broker an agreement on pooling some of the region’s $4 trillion in foreign-exchange reserves. Japan’s Prime Minister Taro Aso and China’s Premier Wen Jiabao will meet with Lee in Fukuoka on Dec. 13.
Japan may more than double its currency-swap agreement with South Korea to $30 billion to help its neighbor obtain foreign currency as the won’s value falls, Nikkei English News reported. China also may expand its accord with Korea, Nikkei reported.
“What is more important in the short-term for the won is optimism that an arrangement with China and Japan is finally providing dollars to local institutions,” said Dwyfor Evans, a currency dealer with State Street Global Markets in Hong Kong. “This seems to be the driver of the won in recent days and the rate cut is largely taking in its stride.”
South Korea’s stock index rose by a record and the won surged 14 percent after the central bank signed a $30 billion swap deal with the Federal Reserve on Oct. 30.
More Reduction
Signs of an economic slowdown have whetted investors’ appetite for the relative safety of government debt. The yield on government bonds due September 2013 fell 21 basis points to 4.21 percent, according to the Korea Securities Dealers Association.
Goldman Sachs Group Inc. forecast the Bank of Korea will continue with its “proactive easing” and will cut by another 50 basis points by March 2009.
Today’s “surprise reduction indicated the central bank’s concern over rapid deterioration in domestic demand,” Goldman’s economists Eva Yi and Kwon Goohoon wrote in a report today. “As the government has already acknowledged the risk of a recession in 2009, we expect policy responses to stay proactive as they did in the past three months.”
· Nonperforming loans at Korean banks increased sharply during the first three months of this year, as some lenders merged with their troubled credit-card subsidiaries, according to the Financial Supervisory Service yesterday. (출처: The Korea Herald)
금융감독원에 따르면 일부 은행들이 경영난에 처한 신용카드 자회사를 합병하면서 은행권의 부실채권이 급증하고 있다.
· The ABMI, prompted by Korea, is one of the major initiatives of the ASEAN+3 countries to seek closer monetary and financial cooperation which they embarked on following the 1997 Asian currency crisis. (출처: The Korea Herald)
한국이 주도적으로 제기한 아시아 채권시장 제도는 97년 아시아 외환위기 이후 아세안 플러스 3개국이 보다 긴밀한 통화 금융 협력 방안을 모색하기 위한 주요 제안의 하나이다.
· Shinhan Bank, a banking unit of the nation`s second largest financial services firm, is expected to complete the transaction of $350 million worth of issuing upper tier 2 international bonds in London market today. (출처: The Korea Herald)
한국 2위의 금융서비스 회사인 신한은행은 오늘 런던시장에서 3억 5000만불 규모의 상위 티어 2 국제채권 발행을 완료할 것으로 보인다.
· It will help open a way for more discussions on the Asian Bond Market Initiative introduced in early 2003, said Yoon Yeo-kwon, director of the ministry`s International Finance Division. (출처: The Korea Herald)
“이번 한일 공동 채권 발행으로 2003년 초 도입된 아시아 채권시장 제도에 관한 폭 넓은 논의를 위한 길이 열리게 되었다”고 윤여권 재경부 국제금융과장은 말했다.
· The onset of Korea Housing Finance, which sells bonds to use the proceeds to buy mortgages and allows borrowers easy access to 10-year or longer-term housing loans, has also propelled bank lending, bank officials explained. (출처: The Korea Herald)
채권을 매각한 대금으로 모기지를 매입하여 차입자들이 10년 이상의 장기 주택대출을 쉽게 받을 수 있도록 하는 한국주택금융공사가 발족함에 따라 은행들의 대출도 늘어났다고 은행 간부들은 설명했다.
· Bond issues by Korean banks increased just 200 billion won ($173 million) during the three months to December, the lowest quarterly growth of 2003, the Bank of Korea reported yesterday. (출처: The Korea Herald)
어제 한국은행에 따르면 지난 해 4분기 중 국내 은행의 금융채권 발행액은 2천억원 증가에 그쳐 2003년 분기별로 가장 낮은 수준을 보였다.
· Samsung Card said it will initially borrow $200 million at the one-month London Inter-Bank Offered Rate (Libor) plus 0.5 percentage point with two-year maturity, using auto receivables as collateral. (출처: The Korea Herald)
삼성카드는 먼저 자동차 할부금융 채권을 담보로 제공하고 2억불을 1개월짜리 런던은행간금리(Libor) 플러스 0.5퍼센트로 2년간 차입할 것이라고 말했다.
· According to the regulatory body, Lone Star has allegedly collected debts it took over from local lenders since June last year, when the fund acquired a 49 percent stake in Shinhan Credit Information Co., a debt-collecting unit of Shinhan Financial Group, the nation`s second-biggest group of financial institution. (출처: The Korea Herald)
금감원에 따르면 론스타는 지난 해 6월 신한금융지주의 채권추심 영업자회사인 신한신용정보의 지분 49%를 인수한 뒤 자신들이 인수한 채권에 대한 추심을 해왔다.
· Lee Jung-jae, chairman of the Financial Supervisory Commission, instructed the watchdog to work out measures to improve the ABS market, which he said currently accounts for 30 percent to 40 percent of the nation`s total bond issues. (출처: The Korea Herald)
이정재 금융감독위원장은 채권시장에서 30-40%를 차지할 정도로 성장한 ABS제도를 개편할 수 있는 대책을 마련하라 고 지시했다.
· Delivering a speech at a meeting of finance officials from Asia-Pacific Economic Cooperation members, Kim said strong bond markets will enhance the efficiency of financial markets and provide secure capital in the region. (출처: The Korea Herald)
김 차관은 아시아-태평양 경제협력체 회의에서의 연설을 통해 채권시장이 튼튼해야 금융시장의 효율화를 기하고 아태지역에 안정적인 자본 공급이 가능할 것이라고 말했다.
· Other goals included strengthening financial systems and bond markets, improving emergency preparedness and responding effectively to volatile energy prices. (출처: The Korea Herald)
여타 목표에는 금융 시스템 강화와 채권 시장 활성화, 비상 준비태세 강화, 변동이 심한 에너지 가격에 대한 대처 능력 제고 등이 포함되었다.
· Local lenders largely scaled down the proportion of bad debts in its total loans this year, improving its financial stability, the top financial regulator said yesterday. (출처: The Korea Herald)
올해 국내 시중은행들은 대부분 재무 안정성 개선을 위해 전체 대출에서 차지하는 부실채권의 비중을 축소했다고 금융 규제당국은 어제 말했다.
· BOK officials attributed the shortfall seasonal factors such as brisk demand for working capital and a rise in loans from financial institutions and bond issues. (출처: The Korea Herald)
한국은행 관계자는 자금 적자를 운영자금의 수요 급증과 금융기관 대출과 채권 발행 증가 등과 같은 계절적 요인으로 돌렸다.
· Aside from the stake purchase, GE Consumer Finance promised to buy subordinated bonds to be issued by Hyundai Capital by 2006. (출처: The Korea Herald)
지분 매입과는 별도로 GE소비자금융은 현대캐피탈이 발행할 후순위채권도 매수하기로 약속했다.
· Korea`s financial regulators have found that U.S. equity fund Lone Star collected debts illegally in Korea, the Financial Supervisory Service said yesterday. (출처: The Korea Herald)
미국계 투자펀드인 ‘론스타’가 국내에서 불법으로 채권추심 영업을 해오다 금융감독원에 적발되었다.
· Only investment in direct financing, such as bonds and stocks, are tax-free. (출처: The Korea Herald)
채권과 주식 등과 같은 직접 금융상품에 대한 투자만 세금이 면제되고 있다.
· KorAm said it scaled back provisions to cover risky credit-card loans, emerging from last year`s industry-wide struggle to reduce bad debts and improve financial health. (출처: The Korea Herald)
한미은행측은 지난 해 금융업계 전반에 걸친 부실채권 감소와 재무건전화 노력에 따른 신용카드 대출 부실화를 대비해 충당금 규모를 축소했다고 말했다.
· He also pledged Korea`s full support to establish more stable financial systems based on its experience with asset-backed securities markets in the wake of the 1997-98 financial crisis. (출처: The Korea Herald)
그는 또 한국이 1997년에서 98년 사이의 금융위기 이후 자산담보부채권 시장의 경험에 기초하여 보다 더 안정된 금융시스템을 수립하는 데 전폭적인 지원을 약속했다.
· Starting with initial capital of 450 billion won, the corporation plans to issue 5 trillion to 6 trillion in mortgage-backed securities this year to secure the necessary funds for its operations and increase its liquidity by up to 68 trillion won over the following five years, the ministry said. (출처: The Korea Herald)
자본금 4천500억원으로 출범하는 주택금융공사는 내년에만 5조-6조원의 주택채권담보부증권(MBS)를 발행하는 등 향후 5년간 68조원의 주택자금을 단계적으로 유동화할 것으로 예상되고 있다.
· The ministry said it will increase the portion of stock investment in its portfolio to manage pension funds to enhance profitability, and will lower the portion of bond investment to 59 percent this year from 65 percent last year. (출처: The Korea Herald)
예산처는 수익성을 높일 수 있는 방향으로 금융자산이 배분되도록 주식투자 비중을 높이는 대신 채권투자 비중은 지난해 65%에서 올해에는 59%로 낮출 거라고 설명했다.
· The financial regulator said in a report that nonperforming loans at 19 domestic banks totaled 21.27 trillion won ($18.24 billion) in the first quarter, up 14.4 percent from 18.6 trillion won at the end of last year. (출처: The Korea Herald)
금융감독원에 따르면 지난 1분기 19개 국내 은행의 부실 채권은 21조2천700억원으로 작년 말의 18조6천억원보다 14.4% 증가했다.
· LG Card Co.`s assets will exceed its debt in 2006 after two bailouts in a year, according to the Korea Development Bank, which manages the card issuer on behalf of creditors. (출처: The Korea Herald)
LG카드의 주채권은행인 한국산업은행에 의하면 1년에 두 번의 구제금융을 받았던 이 카드사의 자산이 2006년에는 부채를 초과할 것이라고 한다.
· Chohung, which was taken over by Shinhan Financial Group, had the second-highest bad-loan ratio of 3.74 percent as of June 30, from 4.82 percent six months ago. (출처: The Korea Herald)
신한금융지주회사에 의해 인수된 조흥은행은 6개월전 4.82%였던 부실채권 비율이 6월 30일 현재 업계에서 두번째로 높은 3.74%를 기록했다.
· Korea`s mortgage market gained momentum in March, after the Korea Housing Finance Corp. was established, allowing banks to offer mortgages with maturities of up to 20 years and issue bonds backed by them. (출처: The Korea Herald)
한국의 모기지시장은 한국주택금융공사가 설립되어 은행들로 하여금 만기 20년까지의 모기지를 제공하고 그를 담보로 한 채권을 발행하도록 한 3월 이후부터 활기를 얻었다.
· According to the Financial Supervisory Commission, 19 Korean banks set aside 8 trillion won in provisions last year alone to cover bad loans to households and cardholders. (출처: The Korea Herald)
금융감독위원회에 따르면 지난 해 19개 국내 은행은 가계와 카드 보유자의 부실 채권 처리를 위해 8조원을 충당금으로 적립했다.
WRAPUP 3-Bank of Korea talks of "emergency" after record cut

825 words
11 December 2008
4:28 AM GMT
AFX Asia
English
(c) 2008, AFX Asia. All rights reserved.
By Seo Eun-kyung and Yoo Choonsik SEOUL, Dec 11 (Reuters) - South Korea's central bank slashed interest rates by a record 1 percentage point to an all-time low on Thursday and warned that Asia's fourth largest economy was on the brink of an emergency that may require more drastic action. South Korea's economy has been losing traction so fast that some economists see it heading into its first recession since the 1997/1998 Asian crisis, while its banks, plagued by a persistent dollar funding squeeze, have turned off the taps for borrowers. The Bank of Korea cut the base rate to 3.0 percent, marking the fourth reduction since early October when the rate was 5.25 percent. It now stands at the lowest since the rate-setting system was adopted in 1999. "We are on the verge of an emergency situation that may need more drastic policy," Bank of Korea Governor Lee Seong-tae told reporters, saying future policy would focus on lifting the economy and easing a credit squeeze.
"If the existing liquidity supply measures are not effective, we can directly inject money into sectors suffering a cash crunch," he said. Analysts said the much bigger-than-expected rate cut and the central bank's comments made further cuts more likely. "It is not a good policy to keep waiting longer and take steps in a gradual manner," governor Lee said of the central bank's biggest ever rate cut. Nine of 10 analysts in a Reuters poll had forecast a cut by 50 basis points in the base rate, with the remaining analyst predicting a 25 basis-point dip. For a graphic on the South Korean base rate, double-click: https://customers.reuters.com/d/graphics/KR_RTS1208.jpg "This drastic move suggests Korea's economic growth is in real danger of a big slowdown and the Bank of Korea is ready to take further aggressive measures, as it has been attacked for not doing much to stabilise the financial market and economy," said Park So-yeon, an economist at Korea Investment and Securities. South Korea, saddled with high foreign debt, a weakening currency, capital outflows and doubts about the health of its banking sector is seen among the region's most vulnerable economies to the global financial crisis that has already pushed the United States, Japan and Western Europe into recession. Seoul has responded with a slew of emergency measures, including $130 billion in foreign debt guarantees and nearly $10 billion in fiscal stimulus, on top of aggressive central bank easing. MORE CUTS AHEAD Economist Park Sang-hyun at HI Investment & Securities said he was downgrading his rate outlook: "I had expected the rate to be lowered to as low as 2.75 percent, but the rate may go below 2 percent." The Bank of Korea also said it would add 12 brokerage houses to those eligible for its repurchase agreement operations, a move that will help non-banking institutions secure funds more easily. December treasury bond futures soared as much as 114 ticks to 110.80 as investors priced in higher chances for additional, aggressive rate cuts. Seoul stock market's benchmark KOSPI rallied immediately after the decision but has soon given back some of the gain as investors turned their attention back to the stark prospects for South Korea's economy and corporate earnings. Won was up 2.2 percent against the dollar by 0252 GMT, also retreating from its rise of nearly 4 percent immediately on profit-taking and on the gloomy economic prospects. The drop in benchmark rate of 2.25 percentage points, if followed by an equivalent drop in bank lending rates, should save South Korean companies and consumers some $30 billion in annual interest payments on their debt, Reuters calculation shows. The latest move comes amid media reports in the region that Japan and China were close to agreeing on expanding currency swap arrangements with South Korea to help their smaller neighbour restore confidence among international investors. The Bank of Korea is due to release its first official forecasts for 2009 economic growth on Friday with mounting fears the economy could register its first annual decline in 11 years in 2009. South Korea's economy expanded 5 percent in 2007 but the growth is seen slowing to around 4.5 percent this year and more than halving to around 2 percent next year, with some global investment banks even predicting an outright contraction in 2009. (Editing by Jonathan Thatcher and Tomasz Janowski ) Keywords: KOREA ECONOMY/ (choonsik.yoo@thomsonreuters.com; +82 2 3704 5580; Reuters Messaging: choonsik.yoo.reuters.com@reuters.net)