SEOUL, Sept 6: Headlines warn of a “September crisis.” The currency falls to a four-year low and the stock market tumbles. Rumors swirl that foreign investors will pull out their money.

A spasm of anxiety has gripped South Korea this week amid a blitz of alarming media reports and speculation that have triggered painful memories of the Asian financial crisis that devastated the country nearly 11 years ago.

“Already uneasy financial markets are showing signs of racing toward wholesale panic,” the Maeil Business Newspaper said on Tuesday, after the benchmark stock index plunged 4.1 per cent the previous day.

Government officials and economists dismiss it as a media-driven scare with little basis in reality. Even if there was a crisis, they say, the South Korean economy is much better prepared than it was a decade ago to deal with it.

The anxiety reached such a pitch that even Prime Minister Han Seung-soo was compelled to speak up and try to restore calm.

“The theory of a ‘September crisis’ is nothing but groundless rumour,” Han said , adding that media reports about a possible crisis were inflated.

“The size of our economy has become larger and we also have an appropriate level of foreign exchange,” he said.

Currency reserves can be used to defend the value of a nation’s currency.

Concerns grew early this week after markets tanked.

“The first day of September, ‘Black Monday,”’ said the top headline in Tuesday’s Seoul Economic Daily newspaper.

Helping fuel the angst were media reports speculating that foreign investors who held about $7 billion in South Korean government bonds maturing later this month would pull those funds out of the country.

That could further pressure an already weak currency, the won, which fell to 1,148.50 to the US dollar on Wednesday -- its lowest close since Oct. 7, 2004 -- before recovering a bit later in the week.

Citibank Korea economist Oh Suk-tae and others say there is no evidence to support such a view.—AP