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| In this photo taken Sept. 21, the won-dollar exchange rate is shown on an electronic signboard at a Hana Bank dealing room in Seoul. Yonhap |
Korea plans to implement steps to stabilize the market in a timely manner as the U.S. Federal Reserve's latest sharp rate hike could amplify market volatility and raise economic uncertainty for some time, the finance minister said Thursday.
Finance Minister Choo Kyung-ho also said the government will closely monitor factors that might affect the movement of the South Korean currency and "actively" manage market volatility in the short term.
"As the U.S. and Europe have been accelerating their aggressive monetary tightening, there is a possibility that high uncertainty in the financial markets will last for a considerable period of time," Choo said at a meeting with the chief of the central bank and top financial regulators.
After a two-day policy meeting, the Fed on Wednesday (U.S. time) raised its target interest rate by 75 basis points for a third straight time to a range of 3-3.25 percent, the highest since 2008. It also hinted at further large hikes, leaving open the possibility of another 75 basis point increase this year.
Fed Chair Jerome Powell voiced a hawkish policy stance, saying the Fed is "strongly resolved" to tame inflation and would "keep at it until the job is done." The Fed's decision sent U.S. stocks sharply lower, with the Dow Jones Industrial Average falling 1.7 percent.
Choo said the government will closely monitor overseas investments by the state pension fund and residents, and take steps to support exporters facing a shortage of FX liquidity in an effort to ease an imbalance in supply and demand of the dollar.
The Korean currency has weakened about 14 percent against the U.S. dollar amid the Fed's aggressive monetary tightening.
Last week, the won tumbled below the 1,390 won mark against the U.S. dollar for the first time in over 13 years. The won's sharp weakness has raised concerns about capital outflows and complicated policymakers' efforts to curb inflation. (Yonhap)
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