By Choi Sung-jin
South Korea's financial markets have maintained relative calm when North Korea conducted nuclear tests or launched missiles, showing only limited and temporary instability. On Wednesday, too, the domestic stock market remained stable, shrugging off the North's claims that it tested a hydrogen bomb.
"This time around, however, the situation could be somewhat different, not only because the communist regime says it was a hydrogen bomb device but it came amid China's hard landing and a new conflict in the Middle East (between Saudi Arabia and Iran)," the nation's top financial regulator said. "The government will cope with this crisis with unusual tension and alertness."
Financial Services Commission Chairman Yim Jong-yong made the remarks at a meeting with financial experts Thursday. His comments showed authorities place more weight on prudence on the crisis' ripple effects, market watchers said.
Another FSC official was more specific. "Because of the plunge of the Chinese stock markets, as shown by repeated use of the circuit breaker, and the possible fundamental changes in the nature of the North Korean nuclear crisis, we will continue to monitor market movements very closely and enhance the role of institutional investors if necessary," said Kim Yong-bom, secretary general of the top regulatory agency.
Kim put particular emphasis on the need to watch the flow of foreign funds as a result of rising interest rates in the U.S., and accelerating outflows of money from Middle East countries reeling from low oil prices and the resultant aggravation of fiscal problems.
"This will be a tough year for domestic financial markets, which forces market players to remain doubly attentive to global trends while refraining from overreacting to specific events with limited consequences," Kim said.
Currency market watchers forecast the Korean won would remain largely weak under the multiple negative factors of the U.S. rate hikes, Chinese turmoil and North Korea's renewed play with nuclear fire, which will more than offset the positive news of the nation's current account surplus hitting the $100 billion landmark. The Korean won fell below 1,200 won per U.S. dollar for the first time in four months Thursday.
But market watchers said once the dust settles and the current account surplus is maintained, the Korean currency could regain its strength, adding that the parity rate would not sink much below the 1,200-won level.
Meanwhile, Korea's foreign exchange reserves increased $4.4 billion to a record high $367.96 billion last year, the sixth-largest in the world, pushing Russia to seventh place, according to the Bank of Korea.
South Korea's financial markets have maintained relative calm when North Korea conducted nuclear tests or launched missiles, showing only limited and temporary instability. On Wednesday, too, the domestic stock market remained stable, shrugging off the North's claims that it tested a hydrogen bomb.
"This time around, however, the situation could be somewhat different, not only because the communist regime says it was a hydrogen bomb device but it came amid China's hard landing and a new conflict in the Middle East (between Saudi Arabia and Iran)," the nation's top financial regulator said. "The government will cope with this crisis with unusual tension and alertness."
Financial Services Commission Chairman Yim Jong-yong made the remarks at a meeting with financial experts Thursday. His comments showed authorities place more weight on prudence on the crisis' ripple effects, market watchers said.
Another FSC official was more specific. "Because of the plunge of the Chinese stock markets, as shown by repeated use of the circuit breaker, and the possible fundamental changes in the nature of the North Korean nuclear crisis, we will continue to monitor market movements very closely and enhance the role of institutional investors if necessary," said Kim Yong-bom, secretary general of the top regulatory agency.
Kim put particular emphasis on the need to watch the flow of foreign funds as a result of rising interest rates in the U.S., and accelerating outflows of money from Middle East countries reeling from low oil prices and the resultant aggravation of fiscal problems.
"This will be a tough year for domestic financial markets, which forces market players to remain doubly attentive to global trends while refraining from overreacting to specific events with limited consequences," Kim said.
Currency market watchers forecast the Korean won would remain largely weak under the multiple negative factors of the U.S. rate hikes, Chinese turmoil and North Korea's renewed play with nuclear fire, which will more than offset the positive news of the nation's current account surplus hitting the $100 billion landmark. The Korean won fell below 1,200 won per U.S. dollar for the first time in four months Thursday.
But market watchers said once the dust settles and the current account surplus is maintained, the Korean currency could regain its strength, adding that the parity rate would not sink much below the 1,200-won level.
Meanwhile, Korea's foreign exchange reserves increased $4.4 billion to a record high $367.96 billion last year, the sixth-largest in the world, pushing Russia to seventh place, according to the Bank of Korea.
