In an emergency meeting, the Bank of Korea slashed interest rates by a record 75 basis points. This is an attempt of the bank to restore confidence in the customers after stocks lost a fifth of their value. The stocks fell to a decade low last week.

"The Bank of Korea will likely cut rates again at their monthly rate-setting meeting next week,'' Chun Chong Woo, an economist at SC First Bank Korea Ltd. in Seoul. "The Bank of Korea seems determined to stop the market panic from the U.S. financial crisis spreading.''

"There will be no instant satisfaction, but these measures will help cement a bottom one by one," said Oh Hyun-seok, an analyst at Samsung Securities.

Last week the bank raised the limit on so-called total loans to 9 trillion won from 6.5 trillion won. The bank is offering loans  to commercial banks at a special interest rate. This rate is much lower than the nation's benchmark rate of 4.25 percent -- with the funds earmarked for small and medium-sized businesses.