UPDATE 1-South Korea dismisses talk of FX crisis

SEOUL, Feb 17 - South Korea on Tuesday dismissed market talk it could plunge into a foreign-exchange crisis in March, saying it could meet demand.

"Such concern about foreign-currency liquidity shortages (has been) exaggerated," Vice Finance Minister Hur Kyung-wook said during a programme on the state-run KBS radio.

The country expects to post more than a $13 billion current account surplus this year, state-run banks have been borrowing from abroad and the central bank has been injecting sufficient dollars into the local money markets, Hur said.

"It is true that the won's volatility has increased recently. But it is not because of (the possibility of a) crisis," Hur said.

The remarks came as the won's recent sustained weakness, down more than 5 percent against the dollar over the past week, gave rise to concerns that the country could fall into a foreign exchange crisis next month.

The won fell 1.5 percent on Tuesday alone to touch a 10-week low of 1,449.9 per dollar. It stood at 1,444.9/5.5 at 0449 GMT.

A persistently high level of risk aversion in international financial markets has led to several analysts predicting troubles for South Korean banks and companies in securing dollars to pay back their maturing foreign debt.

A similar fear swirled between September and November last year when the won plunged nearly 30 percent before recovering some of the losses after South Korea sealed currency swap lines with the United States, China and Japan.