So the South Korean central bank cut its key rate to 4.25%.
Australian economy is in nowhere the exposed state that South Korea's is, despite the similarities of current account deficits and large overseas debts.
Australia have a different sort of economy though with dependence on commodities: South Korea's is in exporting manufactured goods, with the ship building industry vital, and a growing source of concern because of huge US dollar payments due on ships that are not now wanted by shippers around the world.
But the South Korean won and the country's major index, the Kopsi, have both slumped sharply this year, much in the same way the Australian dollar and the ASX200 has dropped.
The Reserve Bank intervened in the Aussie dollar's Friday's near free fall in offshore trading.
The South Korean central bank has been intervening off and on for months trying to support the currency, without success.
The won hit a 10 year low on Friday and has fallen 35% so far this year. Australian currency is down by roughly the same amount from the high of 98 USc (and more against the yen, though). The won was off around 1.4% yesterday.
The Aussie was trading around 62 USc yesterday in Australia. That's a fall of around 36%. Against the yen the rate has almost halved to a post World War II low of just over 56 yen on Friday night. The Aussie dollar was just over 61 US cents this morning.
Australian central bank justified its rate cut this month in terms of what it saw coming: the South Korean cut yesterday was justified in terms of what is happening now.
Shares across Asia fell yesterday amid fears that more government measures will be needed to help fend off .
Japan, China, Hong Kong and India were hit hard. Tokyo closed at a 26 year low and Hong Kong fell around 13% in its biggest fall since 1989 and the events in Bejing in June of that year when tanks crushed student protests.
Only South Korea rose, with a late burst that popped the market up 0.8% at the end.
South Korea is a major source of demand for our commodities, and we import cars, machinery and consumer entertainment and technology products. It is our fourth biggest export market.
So what happens in the economy is of vital importance.
South Korea's central bank on Monday cut its key rate, the seven day repurchase rate, by 0.75% to 4.25% after an unscheduled meeting of the bank's main rate setting group.
As the rate cut came less than three weeks after a reduction of 0.25%, the central bank of South Korea isn't a wimp, by our standards. Just a bit rattled, like we all are at the moment.
And, President Lee Myung-bak told parliament the government would boost spending and cut taxes next year and stood ready to inject liquidity into the system until markets calm.
It promised $US130 billion in total in aid and US dollars last week.
The cut is the largest since the central bank started its current system of setting base rates in 1999.
The market bounced for a while, after it fell 20% last week. (Our market was off 3 %.) The central bank said it considered buying up to 10 trillion won ($US7 billion) of bonds issued by local commercial banks to provide extra liquidity for the cash-starved banking sector.
The won continued to slip and was quoted at 1,440.80/42.10 to the US dollar.
President Lee told the parliament that he would pursue deregulation of the financial services sector despite the global crisis, but would also tighten supervision to ensure capital is safeguarded. (An each way bet.)
The president has already said the country faces even graver danger than during the 1997-98 Asian financial crisis when the country was only rescued from default by an IMF-led bailout that totalled $US57 billion.
Already the spending and other measures from the government and the central bank total close to $US150 billion so far this year, and more if you count the billions spent trying to defend the won.
The country has currency reserves of about $US240 billion (before last week's $US30 billion promise to deliver more greenbacks to the country's banks).
So it would seem the country is not looking to the IMF for help even though it could borrow over $US20 billion if need be this time.
It's not that the South Korean economy is in trouble; like ours there's still growth, but it's slowing. It hit an annual rate of growth of 3.9% in the third quarter from last year.
That might have been the slowest pace since 2005 and down from the annual 4.8% rate in the second quarter, but it was growth.
The UK is sliding into recession, Europe is heading the same way as is the US, and Japan is already there.
