How will South Korea respond if the U.S. midterm elections trigger sharp financial-market fluctuations?

Finance Minister Lee Hyoung-il said authorities would closely monitor the elections’ effects, including the composition of the U.S. Congress and possible changes in Washington’s external policies. If sharp fluctuations occur, Korea will coordinate with relevant institutions on timely stabilization measures, including emergency bond buybacks when necessary.

Why are Korean authorities concerned about the effect of the U.S. midterm elections on markets?

Lee said the elections could affect markets through changes in the composition of Congress and shifts in U.S. external policies amid a changing political landscape. He also pointed to technology-company earnings and investment outlooks, global oil prices, and fiscal instability in France as factors that could add to market volatility or affect government bonds.

What change to Korea’s stock settlement cycle is Finance Minister Lee Hyoung-il considering?

Lee said he would discuss shortening the current T+2 settlement cycle to T+1 and gather opinions from market participants. He described a shorter cycle as a way to reduce related risks and improve the efficiency of fund management.

Korea to closely monitor impact of upcoming US midterm elections

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Summary

Korean financial authorities said Thursday they will monitor financial-market effects of the upcoming U.S. midterm elections and take immediate countermeasures if markets fluctuate sharply. Finance Minister Lee Hyoung-il discussed market risks with senior financial officials after the Federal Reserve held its benchmark rate steady overnight. Lee said Korea’s economy remains sound, while noting that the government could use measures such as emergency bond buybacks to stabilize the bond market. He also said officials would discuss shortening the stock settlement cycle from T+2 to T+1.

Key Facts

The Federal Reserve kept its benchmark rate in the 3.75-4.00 percent range in a 10-2 vote, leaving the Korea-U.S. key rate gap at up to 1 percentage point.
Korea’s gross domestic product advanced 1 percent on-quarter in the third quarter.
Lee said earnings and investment outlooks for major technology firms and movements in global oil prices were contributing to financial-market volatility.
The government plans to gather market participants’ opinions on shortening the stock settlement cycle, which Lee said could reduce related risks and improve fund-management efficiency.
BOK Senior Deputy Gov. Kwon Min-soo cited Middle East tensions, concerns about major countries’ fiscal soundness and uncertainty surrounding AI investment as external risks.

By Yonhap

Published Oct 29, 2026 10:51 am KST

From left, Bank of Korea Gov. Shin Hyun-song, Financial Services Commission Chairman Lee Eog-weon, Financial Supervisory Service Gov. Lee Chan-jin and Finance Minister Lee Hyoung-il enter a conference on Meeting on Macroeconomic and Financial Issues in Seoul, Thursday. Yonhap

Korean financial authorities said Thursday they will closely monitor the impact of the U.S. midterm elections on financial markets and take immediate countermeasures if necessary in the event of sharp market fluctuations.

Finance Minister Lee Hyoung-il held discussions on the issue with Bank of Korea (BOK) Gov. Shin Hyun-song, Financial Services Commission Chairman Lee Eog-weon and Financial Supervisory Service Gov. Lee Chan-jin after the U.S. Federal Reserve held its benchmark interest rate steady overnight.

The Fed decided to maintain the rate in the 3.75-4.00 percent range in a 10-2 vote. The decision left the gap between the key interest rates of Korea and the United States at up to 1 percentage point.

"The decision appears to reflect the Fed's continued focus on stabilizing consumer prices while assessing the impact of September's rate hike and other economic indicators to determine its future policy direction," Lee said.

Lee noted that earnings and investment outlooks for major technology firms, along with movements in global oil prices, are fueling volatility in financial markets at home and abroad.

"We also need to monitor the composition of the U.S. Congress following the midterm elections, changes in Washington's external policies amid the shifting political landscape and their impact on markets," the finance minister added.

Lee, however, said Korea's economic fundamentals remain sound, with its gross domestic product (GDP) advancing 1 percent on-quarter in the third quarter.

The finance minister pointed out that the U.S. elections and fiscal instability in France may also adversely affect the government bond market, noting that Korea will work with relevant institutions to implement timely market stabilization measures, such as emergency bond buybacks, when necessary.

Separately, Lee said he would also discuss with the participants ways to shorten the stock settlement cycle from the current T+2 system to T+1.

"Shortening the settlement cycle is an important task as it can reduce related risks and improve the efficiency of fund management," Lee said, noting the government will gather opinions on the matter from market participants.

The BOK, meanwhile, said it will continue to keep a close eye on key market developments following the latest Fed decision.

"The Fed held its policy rate steady overnight, as expected. However, external risks persist due to lingering tensions in the Middle East, concerns over the fiscal soundness of major countries and uncertainties surrounding artificial intelligence (AI) investment," BOK Senior Deputy Gov. Kwon Min-soo said in a separate statement.

Kwon added that the central bank will closely monitor developments in financial and foreign exchange markets, with the European Central Bank and the Bank of Japan also set to make rate decisions this week.

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