South Korea’s crisis worst than a decade ago

President Lee Myung-bak of South Korea said a looming global plunged had made his country’s economic challenges worst than during the Asian financial crisis ten years ago.

South Korea, Asia’s fourth biggest economy has looked exposed to the financial crisis, with the government during the weekend announcing a $130 billion rescue for its financial system and later on will unveil plans to help dying construction industry.

"The overall situation is more serious than the 1997 crisis. Back then it was an Asian crisis but today the entire world economy is at risk," a presidential spokesman quoted Lee as saying during a cabinet meeting.

"It's not like any recovery of our own means we will have escaped the effects of the crisis," Lee said.

This comment came as South Korea’s financial markets seemed to be recovering their composure after some of their vulnerable price swings since the Asian financial crisis almost pushed South Korea down.

"The impact from the global risk is fading, but Korean markets are now trapped with the local economy's own risks such as the construction sector and weaker fund inflow," said Kim Hak-kyun, an analyst at Korea Investment & Securities.

Markets were steady during the morning trade as investors responded to global financial support and waited for the details on how the government would help the construction industry.

VULNERABLE WON

By morning, the Korea Composite Stock Price Index was up 0.26 percent at 1,210.83 points, giving up an early 2 percent gain, while the won currency stood at 1,322 versus the dollar.

The weakening of the won, one of Asia’s worst performing currencies, emphasized concerns that it would be vulnerable to effects from the worldwide financial meltdown.

The weak showing in the won, one of Asia's worst performing currencies with a 30 percent decline so far this year, highlighted investor concerns that it might yet be vulnerable to aftershocks from the worldwide financial meltdown.

"Global financial markets are stabilizing, helped by coordination by the world's financial authorities. But with only those measures, fundamental concerns over the sluggish economy and financial crisis will not disappear," said an analyst at a local futures firm.