Bank of Korea keeps rates steady

South Korea's central bank held its key lending rate unchanged at a record low of 2%, noting that domestic activity is sustaining its "improved movements thanks to the proactive monetary and fiscal policy and upturn in emerging markets."

Though the slump in domestic demand and exports has moderated further, the bank said, there is still uncertainty because of the "likelihood of delay in the recovery of major economies,", i.e., the US, Japan and Europe.

South Korea is very heavily dependent on sales overseas, and the collapse in demand around the world hit manufacturing extremely hard at the end of last year and early this year.

Production has rebounded sharply in recent months, but the central bank said it expects to maintain an accommodative monetary policy stance "for the time being."