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| Hyun Oh-seok Finance minister |
Korea will be quick to respond to any market volatility amid escalating worries that a shift in U.S. monetary policy could further hit emerging markets.
"We are taking swift and drastic action against any volatility in the domestic financial market as several emerging economies are already showing signs of instability," Finance Minister Hyun Oh-seok said in a meeting with economic policymakers, Wednesday.
Emerging markets such as Argentina and Turkey have seen the value of their currencies plummet amid concerns that the U.S. Federal Reserve may further scale down its multi-billion-dollar stimulus program.
The minister warned that the Fed's tapering could prompt investors to withdraw their capital from emerging markets in pursuit of higher returns in the U.S. as tapering will drive up interest rates offered by financial institutions there.
To minimize any repercussions, Hyun said, "We are keeping a watchful eye on fundamentally-weak emerging markets such as Argentina and Turkey because their instability could last some time or take a turn for the worse spilling over into other relatively-solid emerging economies."
He said the government will "strengthen efforts to help the reviving economy stay unscathed from external risks."
There is little doubt the flight to safety from emerging economies could be a heavy blow particularly to markets already struggling with currency volatility.
The U.S. Federal Open Market Committee ends today with a decision on its bond-buying program. Korea's stock market won't open on Thursday and Friday due to the Lunar New Year holidays.
Stock trading fell to 3.85 trillion won ($3.6 billion) in value for the whole month of January, down 585 billion won from a year earlier, according to the Korea Exchange.
But the minister said the current volatility in some emerging markets would have a "limited" impact on the Korean market due to its solid fundamentals which include increased foreign-exchange reserves and current account surplus.
Meanwhile, the minister renewed the government's commitment to achieving an employment rate of 70 percent.
"To achieve the employment target, the government will make efforts to narrow the gap between regular and temporary workers in terms of wages and welfare benefits, while seeking to promote employment for young people," Hyun said. "Moreover it will also help women who quit their jobs due to marriage and other reasons get a job and help them achieve a balance between work and family."
The government will soon release detailed measures to support young and women jobseekers, he added.
