South Korea will take swift and bold steps if necessary to help stabilize the financial markets, the country's finance minister said Wednesday, assuring that the country's economic fundamentals remain strong despite what he called "temporary risks."
In an emergency meeting with other top financial officials, including the head of the Bank of Korea, Finance Minister Hong Nam-ki said the increased volatility in the market was the result of "short-term risks" that happened to overlap.
He vowed "bold and swift" measures to help stabilize the market when necessary.
"Under the contingency plan that has already been devised, (the government) will take swift and bold steps through all available means, such as stock market stabilization measures and easing regulations on buybacks and short selling, at a suitable time," Hong said before the meeting.
Wednesday's meeting came in the face of an apparent stock market crash amid the escalating trade tension between the United States and China, and more recently, another looming trade spat between Seoul and Tokyo.
On Tuesday, the benchmark Korea Composite Stock Price Index (KOSPI) fell 29.48 points, or 1.5 percent, to 1,917.50, the lowest since Feb. 29, 2016, following a 2.56 percent plunge the previous day.
After choppy trading, the Korean won finished unchanged at 1,215.30 to the U.S. dollar in the face of repeated warnings of intervention. On Monday, the local currency plunged to a more than three-year low against the greenback.
The country's top economic policymaker said global stock markets are generally showing weaknesses as concerns of a global slowdown grow, while uncertainties over a U.S. rate cut continue and the U.S.-China trade dispute escalates.
"Domestically, sluggish exports and investment caused by external conditions, along with poor business performance and Japan's export restrictions are adding to difficulties," he said.
BOK Gov. Lee Ju-yeol stressed the need to curb volatility increases in the foreign exchange market.
"The volatility in the local financial and foreign exchange markets has expanded due to the U.S.-China trade dispute and Japan's export restrictions, and there exists a possibility that the markets may continue to become unstable depending on how external conditions develop in the future," the top central banker said.
He also vowed market stabilization efforts, apparently hinting at possible market interventions.
"As now is when we must focus on financial and foreign exchange market stabilization, the Bank of Korea will continue its market stabilization efforts while closely cooperating with the government," he said.
"More fundamentally, maintaining our economy's credibility is more important than anything else, and the central bank and the government will pool their wisdom in consistently managing our macroeconomy to this end," Lee said.