Vice Minister Ki Jae: "Concerns Over Sensitive Reactions in the Foreign Exchange Market... Bold and Swift Stabilization Measures If Necessary"

Lee Ok-won, 1st Vice Minister of Strategy and Finance [Image source=Yonhap News]

[Asia Economy Sejong=Reporter Son Seon-hee] Lee Ok-won, First Vice Minister of the Ministry of Economy and Finance, said on the 6th, "There is a high risk that our financial and foreign exchange markets will react sensitively to various domestic and international variables for the time being," adding, "If necessary, we plan to actively respond by boldly and swiftly implementing market stabilization measures."

On the morning of the same day, Lee held a 'Macroeconomic and Financial Review Meeting' at the Government Complex Sejong and said, "The government will closely monitor market conditions and major risk factors with special vigilance." As the exchange rate showed instability, surpassing 1,270 won again during the morning session, he repeatedly intervened verbally in the foreign exchange market.

The U.S. Federal Reserve (Fed) held its Federal Open Market Committee (FOMC) regular meeting on the 4th (local time) and raised the benchmark interest rate by 0.5 percentage points from the current 0.25-0.5%. This is the largest increase in 22 years since May 2000. Additionally, Fed Chair Jerome Powell indicated a further 'big step' by stating, "There is a broad consensus within the committee that a 50bp (1bp=0.01 percentage point) rate hike should be considered in the next couple of meetings."

As the U.S.'s aggressive tightening materialized, major stock markets fell and government bond yields surged again, causing global financial markets to fluctuate. The pace of monetary tightening is also accelerating in major advanced countries such as Europe, Canada, and the United Kingdom.

Regarding this, Vice Minister Lee diagnosed, "The synchronicity of global financial and foreign exchange markets has recently increased significantly, and accordingly, the volatility of our financial market is inevitably expanding." However, he added, "So far, the impact on our market is not particularly prominent compared to other countries," and "The fundamentals of our economy, external credibility, and ability to respond to external shocks remain robust."