Seoul: Authorities have announced their readiness to implement bold, preemptive measures aimed at curbing market volatility, prompted by the declining Korean won and rising bond yields. In a meeting that brought together private experts and senior officials from relevant government agencies, Lee Eog-weon, chairman of the Financial Services Commission (FSC), emphasized the nation's economic resilience and stability, despite recent fluctuations in financial markets.
According to Yonhap News Agency, Lee highlighted that the country's financial markets had shown signs of stabilization during the second half of the year, buoyed by improved economic conditions and a bullish stock market. However, the recent increase in bond yields and currency market instability has prompted the need for vigilant monitoring and potential intervention.
Bond yields have been on the rise following the Bank of Korea's decision to maintain its key interest rate at 2.5 percent last month, a move intended to safeguard financial stability amid a weakening local currency and an unstable housing market. Market participants speculate that the central bank's easing cycle may have reached its conclusion or could continue for an extended period.
The Korean won concluded the week at 1,473.7 won against the U.S. dollar, approaching the critical 1,500 won threshold. In response to the ongoing market volatility, authorities have decided to extend the bond market stabilization scheme into the next year. The FSC announced that 38 trillion won (approximately US$25.7 billion) in bond market stabilization funds, in conjunction with 61 trillion won in real estate project financing measures, will be prolonged to provide continued support.
Lee also assured that household debts, real estate-related loans, and other potential risks are being effectively managed. He reiterated the FSC's commitment to taking bold, preemptive actions if necessary and pledged to maintain close surveillance of market conditions to mitigate any potential threats to economic stability.