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South Korea revamps cabinet to better fight crisis
Mon Jan 19, 2009 3:42am EST
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By Yoo Choonsik
SEOUL (Reuters) - South Korea's unpopular president replaced his top economic and financial officials on Monday in the face of criticism over his government's handling of an economy slipping closer to its first recession in 11 years.
The appointments come as the top task for President Lee Myung-bak's administration has shifted from battling a possible second financial crisis in a decade last year toward averting the first contraction in 11 years in Asia's fourth-largest economy.
Bond and stock investors welcomed Yoon Jeung-hyun, 62, who once headed the top financial regulatory agency after time at the Asian Development Bank, as the new finance minister while currency traders shrugged off the appointments.
"Today's appointments were made with the focus on the most urgent task of revitalizing the economy," chief presidential spokesman Lee Dong-kwan told reporters.
Bond futures extended gains and stocks held firmer as investors bet the new team of economic planners would draw up swift measures or speed implementation of existing steps aimed at shoring up the sagging confidence in the economy.
"What the market needed was a consistent and predictable policy direction and I believe Yoon can deliver it," said Kim Dong-whan, a fixed-income analyst at HI Investment & Securities.
Former vice finance minister Chin Dong-soo, who heads the state-run Export-Import Bank of Korea, replaces Jun Kwang-woo as the chairman of the Financial Services Commission in charge of spearheading the looming corporate restructuring.
Outgoing finance minister, Kang Man-soo, 63, had suffered from extremely poor support from markets from early days since taking office in early 2008 for flip-flops in his comments mainly on whether the won should move.
"LEEMAN BROTHERS" BREAK UP
He made a series of comments in early 2008 suggesting that he preferred a weaker won to spur exports but had to pour tens of billions of dollars from the foreign reserves for several months thereafter on stopping the currency's plunge.
After President Lee repeatedly refused to sack Kang, local media would often call the two as "LeeMan Brothers" to sound like the failed U.S. investment bank Lehman Brothers.
Some economists, such as Oh Suk-tae at Citigroup, doubted a few new people could do much to fight a crisis that began overseas, while others, including Lim Ji-won at JPMorgan Chase, welcomed Yoon's appointment.
Lee also named Han Duck-soo, who was a finance minister and later the prime minister under the previous administration, as Ambassador to the United States on Sunday, in a sign that he was now opening the door for people outside his own political camp.
Lee enters his second year in office next month and has been widely criticized for failing to do more to lift the economy after winning majority support in the 2007 election partly on a platform of economic reform.
The changes come as President Lee has seen his approval rating hover barely above 20 percent as the economy slides closer toward recession. Continued...
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