July 7 (Bloomberg) -- South Korean President Lee Myung Bak fired a vice finance minister and replaced three cabinet members in an effort to stem a 10 percent decline in the won and quell public anger over U.S. beef imports.

Deputy Finance Minister Kim Dong Soo will replace Choi Joong Kyung, the presidential office today said in a statement on its Web site. Lee also replaced Agriculture Minister Chung Woon Chun, Education Minister Kim Do Yeon and Health Minister Kim Soung Yee.

Lee's pledge to boost South Korea's economy -- on which he won a landslide election in December -- is threatened by daily protests over his decision to resume importing U.S. beef and a slump in the currency that has made imports more expensive and raised living costs for consumers. Spiraling fuel prices led to nationwide protests by truckers last month and have contributed to a slump in voter support for Lee.

``It is a bit doubtful that people will regard the reshuffle satisfactory,'' said Kwak Soo Jong, an economist at Samsung Economic Research Institute in Seoul. ``Beneath people's outcry against U.S. beef lie concerns of the public over deteriorating economic circumstances.''

Lee agreed in April to reopen the South Korean market to American beef, a decision that prompted a flood of protesters to take to the streets of Seoul, resisting what they said is dangerous U.S. meat.

After enduring weeks of protests and seeing the government's popularity plummet, South Korea asked the U.S. to voluntarily limit beef exports into the country to meat from cattle aged less than 30 months. Beef of that age is less likely to be contaminated with ``mad-cow'' disease, also known as bovine spongiform encephalopathy. Scientists say BSE is spread in cattle by tainted animal feed.

Apology, Staff Firings

South Korea banned the meat after the U.S. discovered a case of mad-cow disease in 2003. The restrictions were partially lifted in 2006 before imports were halted again last October after prohibited bone fragments were found in shipments.

Lee apologized June 19 for his handling of the beef issue, saying he would ``humbly accept the public's sharp criticism regarding the first appointments, and make all effort that the next appointments meet the public's requirements.'' He fired most of his top aides, including his chief of staff, on June 20.

While the beef issue led to Lee's support plummeting to about 21 percent last month from 51 percent when he took office in February, the weaker won further undermines confidence in his leadership and replacing Choi, who was in charge of the government's foreign exchange policy, may not convince consumers.

``So the top guy doesn't take responsibility while a subordinate gets sacked,'' said Kwon Hyeuk Boo, an economist and strategist at Daishin Investment Trust Management Co. in Seoul, which manages the equivalent of $2.4 billion. ``This sounds concerning, because changing a vice minister won't change the thrust of economic policy.''

`Stern Action'

The central bank and financial ministry earlier announced they would take ``stern action'' following the won's 10.5 percent decline this year, which has helped push up the inflation rate to a 10-year high.

The won's drop versus the dollar is second only to a 12 percent slump in the Thai baht in 2008, among Asia currencies, according to Bloomberg data. Consumer prices in South Korea surged 5.5 percent in June from a year earlier, the biggest increase in a decade and exceeding the central bank's target for an eighth straight month.

Voter Backlash

Soaring fuel and food costs have sent confidence among South Korea's consumers down to the lowest level since 2000. Manufacturers are the most pessimistic in more than three years.

South Korea's won climbed 0.7 percent to 1,042.90 per dollar at 3 p.m. in Seoul after the finance ministry and Bank of Korea issued statements today addressing their concern over the currency's decline.

``We'll take stern action if necessary when the market imbalance becomes excessive,'' the ministry said in Gwacheon.

Asia's economies were crippled by a currency crisis a decade ago when Thailand's devaluation of the baht prompted investors to pull money from the region. Countries including Indonesia, Thailand and South Korea spent most of their foreign reserves to prop up their exchange rates and had to borrow more than $100 billion from the International Monetary Fund.

``It is urgent to restore credibility in the market,'' Ahn Byung Chan, director-general of the central bank's international bureau, told reporters today in Seoul. ``Perceptions in the market are not in line with the government's intention.''

Asia's policy makers have accumulated foreign-exchange reserves since the 1997 crisis. South Korea had $258 billion in reserves at the end of June, the sixth-highest in the world, trailing only China, Japan, Russia, India and Taiwan.

``The government has set top priority on stabilizing inflation and we will have to manage the foreign-exchange market to meet that goal,'' said Choi Jong Ku, head of the South Korean finance ministry's international bureau. ``We will use foreign exchange reserves again if necessary'' to curb the won's drop, he said.

To contact the reporter on this story: Bomi Lim in Seoul at blim30@bloomberg.net

Last Updated: July 7, 2008 03:54 EDT