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SEOUL : South Korean President Lee Myung-Bak Tuesday appointed one of his close associates as new central bank chief, prompting questions about the bank's independence.
Kim Choong-Soo, 62, ambassador to the Organisation for Economic Cooperation and Development, takes over as governor of the Bank of Korea from Lee Seong-Tae, whose four-year term ends on March 31, the president's office said.
The finance ministry welcomed the appointment saying he would closely cooperate with the government to help the economy recover fully from the downturn.
The president took into account the central bank's independence in selecting Kim, a presidential spokesman told reporters, although the appointment does not require parliamentary approval.
The main opposition Democratic Party, said Kim, who served as chief economic aide to president Lee in 2008, is not "a proper figure" to maintain the bank's independence.
And SC First Bank analyst Oh Suk-Tae told Yonhap news agency: "It is almost certain that government influence would increase, and policy coordination will go smoothly under Kim's leadership."
Market participants expected the next governor would keep an accommodative monetary policy for a while, as the government wants, Taurus Investment and Securities analyst Oh Tae-Dong told Dow Jones Newswires.
The bank is independent of politicians but had nevertheless come under pressure to keep the rate unchanged.
Last week the central bank froze the key interest rate at a record low 2.0 percent for a 13th successive month due to uncertainty about the domestic and global outlook.
Asia's fourth-largest economy was one of the fastest to emerge from the world downturn due partly to aggressive government stimulus measures.
But Finance Minister Yoon Jeung-Hyun has promised to take a cautious approach to unwinding economic stimulus policies.
South Korea grew 0.2 percent quarter-on-quarter in the three months to December 2009, down from a 3.2 percent gain in the previous quarter.
A key indicator of the country's economic outlook declined for the first time in 13 months in January, when the jobless rate jumped to five percent -- the highest since in March 2001.
- AFP /ls
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