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Mon, Jan 03, 2005 - Page 12 News List

S Korea tries to stem won's rise

ROSY OUTLOOK South Korea is offering a monthly record of US$8 billion in treasuries this month in an effort to stabilize the won against the US dollar's expected fall globally

AP , SEOUL

South Korea said yesterday it will offer a monthly record of 8.27 trillion won (US$8 billion) in treas-uries in January, with 5 trillion won (US$4.8 billion) of the sum aimed at stabilizing the Korean currency against a weakening US dollar.

The January issue exceeds December's 5.57 trillion won (US$5.4 billion) and surpasses the previous monthly record of 6.28 trillion won (US$6.1 billion) in treasuries offered in November.

South Korea's won currency has gained more than 15 percent over the past year versus the US dollar, outperforming most other Asian currencies amid the global weakening of the American currency.

Its gains have added woes to the country's export-reliant economy because South Korean exports become more expensive overseas.

The 5 trillion won earmarked for stabilizing the won in January also marked a monthly record of its kind, the Ministry of Finance and Economy in a statement.

Still, the ministry warned that it can issue more state bonds to curb the won's rise against the US dollar.

Also yesterday, the state-run Korea Development Bank forecast that the won's value is likely to increase nearly 11 percent against the US dollar this year.

The won changed hands at an average 1,145 won per dollar last year, the bank said in a report cited by South Korea's Yonhap news agency.

The US' widening current account deficit and a possible revaluation of the Chinese yuan will add to the won's ascent, despite dollar-strengthening factors such as a US rate hike, the bank added.

On Friday, the parliament allowed the government to raise this year's total treasury budget aimed to stabilize the won to 21.9 trillion (US$21.2 billion), up from an 18.8 trillion (US$18.2 billion) ceiling last year.

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