South Korea’s Lee discounts crisis fears as won plunges

SEOUL, October 7, 2008 (AFP) – South Korean President Lee Myung-Bak called for calm Tuesday as the won plunged, saying the nation does not face a repeat of the 1997/98 financial crisis.

“The current crisis facing the nation is wholly different from the foreign exchange crisis of 1997,” he told a cabinet meeting.

“Excessive optimism is dangerous but we don’t have to be mired in pessimism and a sense of crisis.”

The won sank Tuesday to 1,350 to the dollar, down 81 won from Monday’s close and its lowest intraday level in more than seven years, as the global financial turmoil soured sentiment on the local currency.

By 1.20 p.m. (0420 GMT) it had recovered to 1,332 on suspected smoothing operations by the authorities and on export settlements.

The KOSPI benchmark stock index opened 1.3 percent lower but was in positive territory later on bargain-hunting by local funds.

The sharp fall in global stock markets overnight and concern over the world financial system is spurring a flight to safety in the form of the dollar, Woori Futures currency analyst Shin Jin-Ho told Dow Jones Newswires.

“The government is now striving to expand its foreign exchange holdings