Government Maintains Vigilance Amid Middle East Uncertainty... Will Activate Contingency Plans if Needed

Government to Maintain 24-Hour Monitoring System
Heightened Volatility in Won-Dollar Exchange Rate Due to Global Uncertainties

Lee Hyungil, Acting Minister of Strategy and Finance and First Vice Minister, is taking a commemorative photo on the morning of the 19th at the Bankers' Hall in Jung-gu, Seoul, before the start of the Macroeconomic Financial Meeting. From the left, Sehoon Lee, Senior Deputy Governor of the Financial Supervisory Service, Sangdae Yoo, Deputy Governor of the Bank of Korea, Hyungil Lee, Acting Minister, and Hyungju Lee, Standing Member of the Financial Services Commission.

The government announced that it will maintain a joint 24-hour monitoring system with relevant agencies, remaining vigilant in light of both domestic and international uncertainties, such as the U.S. Federal Open Market Committee (FOMC) decision to keep its policy rate unchanged and the possibility of an escalation between Iran and Israel. The government also stated that it will activate contingency plans as needed, depending on the situation.

Lee Hyungil, Acting Minister of Strategy and Finance and First Vice Minister, presided over the Macroeconomic Financial Meeting at the Korea Federation of Banks on June 19, stating, "The volatility of the won-dollar exchange rate has somewhat increased due to heightened caution."

Attendees at the meeting included Sangdae Yoo, Deputy Governor of the Bank of Korea; Hyungju Lee, Standing Member of the Financial Services Commission; and Sehoon Lee, Senior Deputy Governor of the Financial Supervisory Service.

The FOMC, which convened overnight, kept the benchmark interest rate unchanged at the current level (4.25~4.50%) as expected. The statement removed the phrase "risks of high unemployment and inflation," which had been added in May, and assessed that "while the uncertainty of the economic outlook has diminished, it remains high."

Jerome Powell, Chair of the Federal Reserve, stated at a press conference that it is difficult to predict the impact of tariffs on inflation, and that any actual adjustment to interest rates will depend on future economic developments.

Lee Hyungil commented, "Global financial markets evaluated the results of the meeting?such as the rate freeze and the maintenance of the interest rate outlook?as being in line with expectations, and U.S. Treasury yields fluctuated within a narrow range."

Regarding the possibility of an escalation between Israel and Iran, he said, "After Israel's airstrike on Iran, volatility in commodity prices and global financial markets increased." However, he also noted, "Since the end of May, stock prices have been on the rise, and funding conditions, such as corporate bond issuance, have remained smooth, so the domestic financial market has maintained a relatively stable trend."

He further emphasized, "The volatility of the won-dollar exchange rate has somewhat increased due to heightened caution. Uncertainties remain high regarding the Middle East situation, including the Israel-Iran conflict, as well as U.S. tariff policies."

He added, "The government will remain alert, closely monitor relevant trends, and continue to operate the 24-hour monitoring system. If necessary, we will respond promptly in close cooperation with relevant agencies according to the contingency plans for each situation."

On this day, the won-dollar exchange rate in the Seoul foreign exchange market opened at 1,375.0 won, up 5.6 won from the previous session.