"The success of restructuring programmes has differentiated South Korea from other countries which were hit by a foreign exchange crisis." He said fears about global financial turmoil were likely to calm down as the United States would do anything to prevent this from happening.

Lee said he believed the appropriate won-dollar exchange rate at the moment was 1,350-1,400 and that the rate would remain at that level at the end of this year. "Given the current economic conditions, the appropriate exchange rate would be at 1,350-1,400," he said. The won finished at 1,386 per dollar on Fridayagainst Thursday's 1,383 close. Lee also said layoffs of bank workers were inevitable to save the country's ailing banking sector and the economy.

"Workforce adjustments will continue until labour productivity in the banking sector reaches the level of advanced countries," Lee said.

He said the commission aimed to raise per-capita operating revenue to an average of 260 million won ($189,000) by 2000 from the current 150 million won.

About 5,000 unionised workers of the country's banks rallied in a Seoul park on Saturday to protest against plans to lay off numerous banking workers. Union leaders said unions covering the banking sector would launch an indefinite general strike on September 29 unless the government withdrew massive layoff plans. "The government is fixing up problems of the banking industry with tax payers' money. The normalisation of the banks' management is the priority," Lee said.

He said banks had cut their workforce by 15 to 30 per cent since the beginning of this year and that theywere expected to lay off another 10 to 25 per cent before the end of this year. The number of workers at the country's 26 commercial banks fell to 86,500 at the end of June from 106,500 at the end of 1997, according to the commission figures.

The commission said a further 13,000 workers would be laidoff by the end of this year. Lee said the government's measures to boost the staggering economy would not necessarily hamper the financial and corporate restructuring. The economic reform is required as a condition for the record $58.35 billion rescue package arranged by the International Monetary Fund (IMF).

"Tax cuts (aimed at boosting domestic demand) and infrastructure investment have little to do with the restructuring," Lee said. "Such boosting steps will not hinder efforts to restructure problematic corporations and banks on an individual basis," Lee said. "But too relaxed money supply will be dangerous because it could extend structural inefficiency (of companies and banks)."

The commissionclassified five troubled banks as non-viable in June and let them be absorbed by other healthier banks. Seven commercial banks, whose capital adequacy ratio as required by the Bank for International Settlements is lower than eight percent, had to come up with plans to normalise their operations, including imports of foreign capital and mergers. The commission earlier said the government would pour about 25 trillion won to clean up bad loans of the country's banking sector by the end of September.