Amid political turmoil, the Bank of Korea says it will develop short-term currency and implement measures to stabilize the FX market.
The Bank of Korea logo is displayed on top of the central bank’s headquarters building in Seoul, South Korea, Thursday, Aug. 16, 2018. South Korea’s central bank raised interest rates for a second straight meeting on Thursday to combat a 13-year drop in consumer inflation, and raised its forecast for rates to rise to their highest level since 2008.
Jean Chung | Bloomberg | Getty Images
The Bank of Korea said on Wednesday it would boost short-term liquidity and use measures to stabilize the FX market as needed, after South Korean President Yoon Suk Yeol lifted a surprise declaration of martial law overnight.
The announcement came shortly after the BOK held an emergency board meeting, which began at around 09:00 local time. In a statement issued after the meeting, The central bank said it would also make any special loans available to inject funds into the market, if needed.
“As announced together with the government, we will provide sufficient money for a limited period until the financial and foreign exchange markets stabilize,” the Bank of Korea said, repeating a promise made by South Korean Finance Minister Choi Sang-mok earlier in the day. .
Local news agency Yonhap reported earlier Wednesday that South Korea’s financial regulator said it was ready to allocate 10 trillion won ($7.07 billion) to a stock market strengthening fund at any time.
Yoon declared emergency martial law and mobilized the military on Tuesday night. Within hours, the National Assembly voted to reverse the emergency order, forcing Yoon to lift martial law on Wednesday morning. Military units that had been deployed have also been withdrawn, Yoon announced at the time.
“In our view, the negative impact on the economy and financial markets may be short-lived due to uncertainty [the] The political and economic environment can be quickly mitigated by the policy response,” Citi analysts said in a paper.
South Korean stocks faced higher volatility in the US on Tuesday amid political unrest in Korea. The iShares MSCI South Korea ETF (EWY), which tracks more than 90 large and mid-cap South Korean companies, fell nearly 7% to a 52-week low before paring losses to close up 1.6%.
Last week, the BOK lowered its interest rate by a surprising 25 basis points.
South Korean stock markets began trading at 9 a.m. KST.
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