Gov’t Warns of Drawn-Out Financial Crisis

Gov’t Warns of Drawn-Out Financial Crisis

Finance Minister Choo Kyung-ho on Tuesday warned of a drawn-out financial crisis that will require all of Korea’s resources to overcome. “A long battle to overcome the comprehensive economic crisis and consolidate the economy and make it leap forward again has just begun,” Choo said in an emergency meeting at the government complex in Seoul after financial markets crashed around the world.

Over breakfast at the Bank of Korea, Choo also exchanged views with BOK Governor Rhee Chang-yong about the prospects of another U.S. interest rate hike and its possible effects on Korea.

The Korea Composite Stock Price Index fell another 0.5 percent to 2,492.97 points on Tuesday, dropping below 2,500 points for the first time in a year and seven months.

Foreigners shed nearly W300 billion worth of stocks to exchange into U.S. dollars (US$1=W1,286.40). As a result, the won fell W2.4 to W1,286.4 to the dollar. At one point in trading it plunged to W1,292.50, the lowest since the start of the coronavirus pandemic in March 2020.


The U.S. Federal Reserve is expected to hike the base rate by an alarming 0.75 percentage points on Thursday for the first time in 28 years. It already raised the rate by 0.5 percentage points in early May.

This will probably strangle consumer and investor sentiment and send the U.S. economy into a recession and also jolt financial markets or even trigger a credit default in newly developing countries as foreign investors flee.

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