Investment Book, Financial Bust

Yung Chul Park

From October to December of last year, Korea went from being the world?s eleventh largest economy to one surviving on overnight loans from the international money markets. Between November 19, when Korea decided to approach the International Monetary Fund for a rescue, and December 24, the won fell more than 50 percent against the U.S. dollar, the stock price index tumbled from 498 to 350, and the short-term market rate of interest shop up to 40 percent a year.

Although the IMF made a huge rescue package available on December 3, Korean banks suddenly found themselves cut off from the international financial markets. During the last week of December, Korea was on the verge of defaulting on its foreign debts, a fate averted only by a last-minute emergency loan by the IMF and several G-7 countries.