South Korean government agencies and the Bank of Korea held a joint market situation review meeting on the 8th to address high volatility in financial and foreign exchange markets. Deputy Prime Minister and Minister of Strategy and Finance Koo Yun-chul chaired the meeting at the Government Complex Seoul, with attendees including BOK Governor Shin Hyun-song, Financial Services Commission Vice Chairman Kwon Dae-young, and Financial Supervisory Service Senior Deputy Governor Lee Se-hoon. The authorities diagnosed that despite record-high exports and current account surplus indicating strong economic performance, domestic financial and FX market volatility remains elevated due to global policy rate rise expectations and continued foreign capital outflows. The government announced it will adjust the issuance ratio of long-term treasury bonds and significantly strengthen 24-hour monitoring systems for the FX market following its round-the-clock opening on the 6th.
Government Announces Treasury Bond and FX Monitoring Measures
Deputy Prime Minister Koo stated the government will closely monitor risk factors that could trigger excessive volatility in the stock market going forward. He announced that authorities will adjust the issuance ratio of long-term treasury bonds considering market supply and demand conditions to ensure market stability. Regarding the foreign exchange market, Koo emphasized that the 24-hour market opening will significantly improve the convenience of won currency trading, and authorities will strengthen 24-hour monitoring systems to respond to volatility that may occur during nighttime hours. The government plans to finalize and announce a KRW internationalization roadmap this month to enhance the convertibility of the won and increase its utilization in current and capital transactions.
Officials Assess Stock and Bond Market Conditions
Meeting participants evaluated that the stock market experienced some expansion in volatility as it underwent adjustments due to profit-taking by foreigners and institutions following recent surges, rebalancing-purpose selling, and global artificial intelligence economic outlook factors. Regarding the bond market, officials assessed that treasury bond rates showed somewhat eased volatility this month, but future changes in domestic and international monetary policy stance could act as risk factors.
Authorities Address Foreign Exchange Market Volatility
The authorities diagnosed that foreign exchange market volatility expanded due to continued stock selling following increased value of foreign-held stocks, US dollar strength, and yen weakness. Participants agreed to harmoniously operate macroeconomic policy combinations by comprehensively considering growth, prices, financial market stability, and people's livelihoods while closely watching the possibility of renewed geopolitical tensions.
Meeting Reviews Semiconductor and Non-IT Industry Performance
The meeting also reviewed economic trends by major industry. Participants assessed that economic differentiation is appearing between non-IT sectors and semiconductor-centered IT sectors. They analyzed that the expansion of semiconductor weight acts as a factor enlarging financial market volatility, as the ups and downs of the semiconductor industry increasingly affect the entire stock market. Accordingly, attendees agreed on the need to actively discover and foster non-IT next-generation growth engines such as bio, defense, and aerospace alongside enhancing competitiveness in core industries like semiconductors and AI.
FAQ
What measures did South Korea announce on the 8th to address market volatility?
South Korea announced it will adjust the issuance ratio of long-term treasury bonds considering market supply and demand conditions, and significantly strengthen 24-hour monitoring systems for the foreign exchange market following its round-the-clock opening on the 6th.
Why did South Korean authorities diagnose high financial market volatility despite strong economic performance?
Authorities stated that while exports and current account surplus reached record-high levels indicating strong economic performance, domestic financial and FX market volatility remains elevated due to global policy rate rise expectations and continued foreign capital outflows.
