Won strong after sinking: Yoon

Yoon Jeung-hyun

Finance Minister Yoon Jeung-hyun said the sinking of a navy patrol ship on the Yellow Sea will have “limited” impact on the nation’s economy, saying that a slight turbulence in the won’s value on global currency markets, which occurred immediately after the accident, eased. He also said that major economic indicators that lagged earlier this year, most particularly the jobless rate, are set to improve in the future.

Yoon, in a speech to a Seoul business forum yesterday morning, said the military disaster weakened the won in global markets “slightly” after the news broke out because some investors feared the worst possible scenario and started dumping the Korean currency. But the pace of decline eased, he said.

“The potential impact on the economy will be determined by the cause of the accident,” Yoon said. Going by the history of similar security-related accidents, he said, “the local financial markets will recover soon, with limited impact on the overall economy.”

“We will try to minimize the potential fallout by closely monitoring the situation here and abroad.”

The 1,200-ton Navy corvette Cheonan sank into the sea after an explosion with unknown causes on Friday night, leaving 46 Korean sailors missing. Fifty eight of the ship’s 104 crew members were rescued. The won-dollar rate closed at 1,135.50 won yesterday, down 3.2 won from last Friday’s closing as more foreign investors bought Korean currency to buy Seoul shares. Seoul’s main stock bourse Kospi lost 0.34 percent to close at 1,691.99 points yesterday, but foreign investors posted a net buying of 240.7 billion won. Yoon also said the nation’s jobless woes are set to improve. Korea’s January jobless rate soared to the highest level since March 2001, while the unemployment rate among the population aged 15 to 29 surged to 10 percent in February, the highest level in 10 years.

“The job situation is still slumping, but new job creation programs kick off soon, and the data for corporate infrastructure investment is improving, which will push the unemployment rate down,” he said.

By Jung Ha-won [hawon@joongang.co.kr]