The sinking of a South Korean Navy warship off the country's western coast late last week has had a limited effect on the overall economy, a senior government policymaker said, according to Yonhap News.
Finance Minister Yoon Jeung-hyun said at a meeting hosted by the Korean Standards Association in Seoul that the Korean won showed a slight depreciation against the U.S. dollar in global financial markets following the announcement of the sinking, but this trend has stabilized.
The Korean currency depreciated 2.70 won to the dollar at the start of trading earlier in the day, but the decline has been tempered since then.
"The implication for the economy will depend on the results of the investigation into the ship's sinking, but judging by past experience the local financial market should not be seriously affected," he said.
The official added that the government is closely monitoring both domestic and international markets development related to the sinking of the warship and plans to take all necessary actions to reduce any fallout that may take place.
The country's credit default swap (CDS) rate shot up by 0.86 percentage point after the sinking, before the increase narrowed to a range of 0.82 and 0.83 percentage point early Monday.
The rise in CDS, coupled with the won's weakness against the dollar, reflects geopolitical concerns that could rise if the ship was sunk by North Korean military action.
The 1,200-ton South Korean Navy corvette "Cheonan," carrying a crew of 104, sank late Friday near the sea border with North Korea after an unexplained explosion that snapped the 88-meter long ship in two.
Of the total crew, 58, including the ship's captain, were rescued, but 46 others are still missing. The exact cause of the explosion has yet to be determined.
Experts speculated over the weekend that stored munitions could have exploded, although others wouldn't rule out the possibility that the vessel was sunk by a naval mine or torpedo.
Yoon, meanwhile, said that while economic indicators were sluggish in January, conditions are showing signs of improvement from February onwards.
"Macroeconomic indicators such as employment are moving up and with consumer sentiment on the rebound, gains may continue for some time," the country's chief economic policymaker said.
He said that exports are doing well as major trading partners such as the United States and China are showing signs of an economic recovery.
"Inflation should be contained at around 2 percent levels, and if the domestic economic recovery moves forward at the current pace and is helped by solid export gains, South Korea should be able to pull off 5 percent growth this year," he said.
아주경제 박유경 기자 story31@ajnews.co.kr
[아주경제 ajnews.co.kr] 무단전재 배포금지
Finance Minister Yoon Jeung-hyun said at a meeting hosted by the Korean Standards Association in Seoul that the Korean won showed a slight depreciation against the U.S. dollar in global financial markets following the announcement of the sinking, but this trend has stabilized.
The Korean currency depreciated 2.70 won to the dollar at the start of trading earlier in the day, but the decline has been tempered since then.
"The implication for the economy will depend on the results of the investigation into the ship's sinking, but judging by past experience the local financial market should not be seriously affected," he said.
The official added that the government is closely monitoring both domestic and international markets development related to the sinking of the warship and plans to take all necessary actions to reduce any fallout that may take place.
The country's credit default swap (CDS) rate shot up by 0.86 percentage point after the sinking, before the increase narrowed to a range of 0.82 and 0.83 percentage point early Monday.
The rise in CDS, coupled with the won's weakness against the dollar, reflects geopolitical concerns that could rise if the ship was sunk by North Korean military action.
The 1,200-ton South Korean Navy corvette "Cheonan," carrying a crew of 104, sank late Friday near the sea border with North Korea after an unexplained explosion that snapped the 88-meter long ship in two.
Of the total crew, 58, including the ship's captain, were rescued, but 46 others are still missing. The exact cause of the explosion has yet to be determined.
Experts speculated over the weekend that stored munitions could have exploded, although others wouldn't rule out the possibility that the vessel was sunk by a naval mine or torpedo.
Yoon, meanwhile, said that while economic indicators were sluggish in January, conditions are showing signs of improvement from February onwards.
"Macroeconomic indicators such as employment are moving up and with consumer sentiment on the rebound, gains may continue for some time," the country's chief economic policymaker said.
He said that exports are doing well as major trading partners such as the United States and China are showing signs of an economic recovery.
"Inflation should be contained at around 2 percent levels, and if the domestic economic recovery moves forward at the current pace and is helped by solid export gains, South Korea should be able to pull off 5 percent growth this year," he said.
아주경제 박유경 기자 story31@ajnews.co.kr
[아주경제 ajnews.co.kr] 무단전재 배포금지
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