Seoul: The government has announced an emergency buyback of 5 trillion won (approximately US$3.3 billion) in government bonds in an effort to stabilize the fluctuating market, as stated by the finance ministry on Thursday. This initiative comes in response to recent heightened market volatility, with the buyback scheduled over two separate days-2.5 trillion won on Friday and an additional 2.5 trillion won the following Wednesday. This strategy aims to cushion the economic disruptions caused by the ongoing conflict in the Middle East.

According to Yonhap News Agency, the recent uncertainties are primarily linked to U.S. and Israeli airstrikes on Iran, which have sparked a significant selloff in global bond markets. In a bid to counteract these effects, the finance ministry also intends to pursue the net redemption of government bonds by utilizing excess tax revenue. This plan is set to be part of a supplementary budget bill, and if passed, it would be the first such redemption through a supplementary budget since 2021. The exact amount for redemption will be decided during Cabinet discussions and subsequent parliamentary review.

Earlier in the day, the ruling Democratic Party, in collaboration with the government, resolved to present the additional budget bill to the National Assembly on Tuesday. This measure seeks to alleviate the pressures of rising oil prices while providing support to small and midsize enterprises and households that have been adversely impacted by the protracted conflict. Additionally, the government is set to establish a monitoring team to oversee foreign capital inflows as the country moves towards joining a major global government bond index managed by FTSE Russell. The authorities will closely monitor fund movements and develop a rapid response system, with regular meetings involving pertinent agencies to ensure smooth capital inflows.