South Korea plans to raise spending and cut taxes as part of emergency measures to stabilise its economy after falls in the won and on the Seoul stock market.

Kang Man-soo, finance minister, said yesterday the government would also tackle a shortage of US dollars in the banking system. The plan emerged after a crisis summit at the presidential palace with Lee Seongtae, governor of the Bank of Korea, and Jun Kwang-woo, head of the Financial Services Commission.