At the core of the crisis: the plunging value of the Korean currency, the won. Three weeks ago, you needed only 930 won to buy one U.S. dollar. Since then, the exchange rate has soared almost daily. On Wednesday, the rate hit 1035.5 won to the dollar — enough to trigger the third straight halt in trading of the currency this week.
The bail-out package, announced after the market halt Wednesday by newly appointed Minister of Finance and Economy Lim Chang Yuel, includes boosting a government-support fund to cover bad debts, opening some bond markets to foreign investors to attract overseas currency and widening the margin by which the won will be allowed to drop before trading is halted.
But one key element was missing: the Korean government still will not accept an International Monetary Fund bail-out, nor the tight fiscal controls that come with it. As a result, though Korean stocks closed up 7.93 points to 502.59 by day's end, many analysts said the bail-out package would not be enough to solve the country's woes.