Koo Yun-cheol, Deputy Prime Minister and Minister of Strategy and Finance, said, "The government, the Bank of Korea, and the Financial Supervisory Service will make every effort to stabilize the market, keeping even the worst-case scenario in mind," adding, "If the won's trajectory deviates excessively from fundamentals, we will respond in a timely manner."
Deputy Prime Minister Koo held a joint "expanded macroeconomic and finance meeting" with related agencies at the Korea Federation of Banks building in Seoul on the 19th and stated accordingly.
Earlier, after the U.S. Federal Reserve's decision to keep its benchmark rate unchanged overnight, the domestic foreign exchange market opened with the won-dollar rate starting transaction at 1,505 won. That was up 21.9 won from the previous day. It is the highest intraday level in 17 years since March 10, 2009 (1,561 won), during the global financial crisis.
Regarding the Federal Open Market Committee (FOMC) regular meeting of the U.S. Federal Reserve, Deputy Prime Minister Koo said, "While the decision to hold rates was expected, the global financial market early this morning took Chair Powell's remarks that a rate hike cannot be ruled out as somewhat hawkish, pushing U.S. Government Bonds yields higher and stock prices lower," adding, "Since the situation in the Middle East emerged, volatility has persisted in the domestic financial and foreign exchange markets."
He said, "Domestic stock prices are still showing a higher rise than major countries compared with the start of the year, and the corporate bond credit spread, which indicates corporations' funding conditions, is also stable," while adding, "However, we will keep the worst-case scenario in mind and make every effort to stabilize the market."
Financial authorities are conducting stress tests assuming shock scenarios across various variables such as exchange rates, stock prices, and oil prices, while preparing to expand a market stabilization program worth 100 trillion won + α (alpha).
Deputy Prime Minister Koo said, "For the stock market, we will refrain from artificially boosting prices and will accelerate fundamental structural improvements in the capital market," adding, "We will keep a close watch on the foreign exchange market with heightened vigilance. As the 'three foreign exchange bills' passed the National Assembly's Legislation and Judiciary Committee yesterday, we hope investors will promptly return to the domestic market and fully enjoy the benefits."
He continued, "In the bond market, the government and the Bank of Korea (BOK) will coordinate and, when necessary, implement market stabilization measures in a timely manner, such as emergency buybacks and simple purchases of government bonds," adding, "Depending on market conditions, we will flexibly adjust the issuance volume of public bonds, including government bonds, in the second quarter as well."
Deputy Prime Minister Koo also said, "We will push ahead swiftly with reform measures across the foreign exchange and capital markets to be included in the MSCI developed markets index," adding, "We will ensure that the inflow of foreign investment associated with the planned inclusion in the WGBI starting in Apr. proceeds without a hitch this year."