Finance minister vows 'immediate' response to foreign exchange volatility

Financial Supervisory Service Gov. Lee Chan-jin, left, Bank of Korea Gov. Shin Hyun-song, second from left, Finance Minister Koo Yun-cheol, third from left, and Financial Services Commission Chairman Lee Eog-weon pose for a photo in Seoul on June 4. [YONHAP]

Korea’s finance minister on Thursday vowed to take “immediate measures” when necessary to address excessive volatility in the foreign exchange market amid the recent sharp decline of the won against the greenback.

nance Minister Koo Yun-cheol discussed such measures with Bank of Korea Gov. Shin Hyun-song in Seoul, alongside Financial Services Commission Chairman Lee Eog-weon and Financial Supervisory Service Gov. Lee Chan-jin, according to the Ministry of Finance and Economy.

During the meeting, Koo said the government is closely monitoring volatility in the foreign exchange market and vowed to take “immediate measures” when necessary.

“The government is currently monitoring the situation with vigilance so that external uncertainties do not lead to growing market anxiety,” Koo was quoted as saying by the Finance Ministry.

“[The government] will take immediate measures when necessary to address excessive market swings,” he added.

Participants said the recent volatility followed the Iran war, along with continued net selling by foreign investors in the stock market.

“The recent surge in the local stock market has led to temporary rebalancing by foreign investors as they cash in profits, leading to further volatility,” the ministry said in a release.

The financial officials, meanwhile, noted the Korean economy remains solid, with exports soaring 53.2 percent on year in May and the local stock market capitalization ranking as the world’s sixth-largest.

The recent increase in margin loans in the stock market, however, may potentially pose risks to the economy, they said, noting that the country will closely monitor the trend and make efforts to protect investors.

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