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Seoul issues verbal intervention to calm Korean financial markets

2017.08.11 16:01:39 | 2017.08.11 16:36:43
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The South Korean government on Friday intervened verbally in hopes to calm the domestic financial markets under unusual rout from geopolitical tensions as leaders of Washington and Pyongyang ratcheted up their saber-rattling.

“We will act promptly to any market volatility from new provocations from North Korea,” said the government Friday after senior officials from the Ministry of Strategy and Finance met with the Financial Services Commission, Bank of Korea and other economy-related offices.

The Korean markets that had mostly shrugged off military tensions from North Korea rocked after U.S. President Donald Trump warned Pyongyang of “fire, fury and powers the world has never seen before” on Tuesday following the threat from the North Korean foreign minister to teach the U.S. a “severe lesson with its nuclear strategic force.”

The tit-for-tat turned more specific and violent with Pyongyang issuing statements the following days detailing out plans to target waters near Guam mid-August.

The Korean composite stock price index tumbled 1.69 percent to finish Friday at 2,319.71. Over the last four trading days, it slipped 3.4 percent as foreign investors frantically dumped Korean shares. On Friday alone, foreign investors net-sold 648.9 billion won ($567.2 million) worth of Korean shares.

The dollar-won exchange rate also turned volatile as a result. The won ended Friday at 1,143.5 won. It has lost 1.6 percent over the last four days.

Korea’s five-year credit default swap premium, a measure of credit risk, widened 66 basis points on Friday to hit its highest level since April 2016.

The finance ministry warned that even a small event may agitate the market amid the growing geopolitical uncertainty, adding that the government will constantly monitor the situation and take prompt measures to manage volatility in the Korean financial markets.

By Han Ye-kyung

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]



  • Seoul Fri 20 July 2018
  • FRI


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