Seoul
23 October 2008
South Korea is among the nations taking part in this week's Asia-Europe summit in Beijing. Even as the country's president left for the Chinese capital, the latest set of plunging market numbers lit up trading screens in Seoul. As VOA's Kurt Achin reports, South Korea is being hit especially hard by the global crisis, and hopes are high for a global solution coming out of the Beijing summit.
South Korean President Lee Myung-bak's plane for China took off Thursday, while key market indicators nosedived.
The country's main stock index, the KOSPI, hit its lowest point in more than three years Thursday. Trading was halted in the smaller KOSDAQ index after it hit an all-time low.
What most alarms many investors here in South Korea, however, is the further erosion in value of the country's currency, the Won, against the U.S. dollar. With trust and confidence between international banks all but nonexistent, global investors are hoarding dollars and pushing up their value. The Won plunged Thursday by more than three percent, falling more than 33 percent against the dollar this year.
The crisis is expected to dominate the Asia-Europe Meeting, or ASEM, in Beijing. Prior to his departure for the meeting, President Lee called for a jumpstart in the global economy.
He says countries all across the world should aggressively activate their economy by boosting government expenditures and stimulating domestic demand.
South Korea has been taking its own steps in that direction, by loosening bank lending restrictions and guaranteeing $150 billion worth of the country's foreign bank debts. It has also been injecting tens of billions of its more than $200 billion stash of foreign reserves into the local economy.
Seoul hopes to coordinate tighter economic cooperation with other countries, especially its neighbors, fellow export giants Japan and China.
South Korea is also taking the lead in proposing a new international mechanism for preventing crises like these in the future. Details of the proposal are still being sketched out, but they involve empowering multinational institutions, or creating a new one, to act in a supervisory role in the global economy. South Korean officials argue organizations like the International Monetary Fund have waned in influence and are unable to perform that role.
The idea has gotten a lukewarm reception internationally, but is getting some traction here in South Korea. Former South Korean Prime Minister and Finance Minister Han Duck-soo told a forum this month, the idea of a new global regulatory body is worth examining.
"While the impact is global, the institutions which are actually making surveillance and monitoring are not global," he said. "That is one of the very important mismatches."
Separately, President Lee will hold summits with a number of world leaders in Beijing, including newly elected Japanese Prime Minister Aso Taro. The meeting comes at an important time in multinational efforts to end North Korea's nuclear weapons. Tokyo is refusing to participate in energy assistance to the North called for in a six-nation deal, until Pyongyang provides more cooperation on the issue of Japanese citizens abducted by North Korean agents in the 70s and 80s.