On June 4, Deputy Prime Minister and Minister of Finance and Economy Koo Yun Cheol convened a joint Market Situation Review Meeting with relevant agencies at the Government Complex-Seoul to review recent developments and risk factors in the financial and foreign exchange (FX) markets and discuss policy responses.
Participants assessed that favorable market conditions have continued, supported by solid economic performance, including a 53.2 percent year-on-year increase in exports in May to USD 87.75 billion, Korea’s stock market capitalization also rose to sixth place globally, surpassing India. At the same time, participants noted concerns over the recent increase in stock trading financed through borrowing, including margin loans. They agreed to regularly monitor related developments through the Market Situation Review Meeting and other channels, while strengthening preemptive risk management and investor protection efforts.
Meanwhile, participants observed that volatility in the FX market has increased despite a current account surplus at a record-high level, reflecting the impact of the conflict in the Middle East and continued net selling of Korean equities by foreign investors. In particular, they noted that recent sharp gains in the domestic stock market have further amplified volatility through supply and demand pressures arising from temporary portfolio rebalancing and profit-taking by foreign investors. DPM Koo emphasized that government is closely monitoring market developments with heightened vigilance to prevent anxiety from spreading amid elevated external uncertainties, and that any excessive one-sided market movements will be addressed promptly with appropriate measures.
In the bond market, volatility in Korean Treasury bond yields has recently increased amid global market synchronization, driven by inflation concerns and growing expectations of domestic interest rate hikes. They agreed to closely monitor market conditions and maintain close communication with market participants, while ensuring a timely and coordinated response by relevant agencies in the event of excessive market volatility.
Please refer to the attached files.
