A current event/policy issue

Blogger Arrested in Korea for Post That Led to Won's Decline


By EVAN RAMSTAD
(See Correction & Amplification below.)

SEOUL -- South Korean officials arrested a blogger who for months had been criticizing the government's economic policy, charging him with spreading false rumors that led to a drop in the country's currency.


AFP
Park Dae-sung, following his court appearance in Seoul over the weekend.
Prosecutors identified Park Dae-sung, who is unemployed, as the widely read blogger writing under the pseudonym Minerva.

The charge stems from a Dec. 29 posting in which Mr. Park allegedly accused bureaucrats of writing a letter to local bankers to persuade them not to buy dollars so as to raise the value of the won. Prosecutors said Monday that news accounts of Mr. Park's anonymous posting had led to a plunge in the value of the won that forced the government to intervene in trading.

Mr. Park's allegations suggested bureaucrats were trying to undercut the government's measures to help banks obtain U.S. dollars.

The arrest of Mr. Park highlights two facets of Seoul's response to the economic crisis that worry analysts: a currency policy that isn't transparent enough for traders and an intolerance of criticism of public policy.

Currency traders keep close watch for changes in the government's stance because the won is thinly traded, giving the government outsized influence. The government signaled early last year it no longer supported a strong won, beginning the most recent shift in trading sentiment.

In 2008, the won reversed three years of steady gains with a 26% decline in value versus the dollar, the chief currency against which it is traded. That decline is one of the most visible effects of the global crisis in South Korea.

Meanwhile, since the debt crisis turned global in September, officials have lashed out at economists and journalists who negatively portray South Korea's economic prospects or policy measures. And regulators last month announced an investigation of foreign stock analysts who placed "sell" ratings on South Korean stocks. The arrest of Mr. Park appears to represent this new level of sensitivity to criticism about the economy.

—SungHa Park contributed to this article.
Write to Evan Ramstad at evan.ramstad@wsj.com

Corrections & Amplification

The Korea Securities Dealers Association, an industry trade group, is investigating stock ratings issued by foreign brokerages on Korean companies last year. This article incorrectly says that government regulators were conducting the investigation.