08.10.2008 - Korea: Losses from Forex Stabilization Fund snowballing
From Chosun.com: The government’s foreign exchange stabilization fund, which is used to defend the won from volatile fluctuations against the U.S. dollar, has accrued losses of W26 trillion (US$1=W1,269). The reason was massive losses from investing in derivatives products in the attempt to defend the won, compounded by foreign exchange losses due to fluctuation. The forex stabilization fund draws its resources by issuing stabilization bonds, so losses incurred must be filled using taxpayers’ money. In a report submitted to the National Assembly on Monday, the Ministry of Strategy and Finance said losses by the forex stabilization fund stood at W26.37 trillion as of the end of 2007. This means it will be impossible to repay W26 trillion out of the fund’s entire debt even if it sells off all its dollar holdings and other assets..... Full Article: Source