In response to the Federal Open Market Committee’s (FOMC) decision to cut interest rates, the South Korean government held an emergency meeting aiming to ensure stable management of the financial and foreign exchange markets. Deputy Prime Minister and Minister of Economy and Finance, Choi Sang-mok, along with the Bank of Korea Governor, Lee Chang-yong, the Chairman of the Financial Services Commission, Kim Byung-hwan, and the Governor of the Financial Supervisory Service, Lee Bok-hyun, convened at the National Bankers’ Association on the 19th to discuss these issues.
The meeting reviewed global financial market trends and the impact on domestic financial and foreign exchange markets following the FOMC’s decision to lower the interest rate to 4.25-4.5%, marking the third consecutive reduction. Despite the rate cut, global markets reacted with tighter interpretations, leading to sharp increases in US Treasury yields and the value of the dollar.
Deputy Prime Minister Choi noted potential short-term volatility in the financial and foreign exchange markets due to the weakening of major world currencies. He emphasized the need for calm responses from market participants, warning that excessive movements in one direction could result in significant counter-reactions.
The government and the Bank of Korea will remain vigilant, maintaining a 24-hour monitoring system, and will implement additional stabilization measures if volatility becomes excessive. Plans include improving the foreign exchange supply-demand and increasing liquidity, with adjustments to policies such as trading infrastructure improvements related to the World Government Bond Index (WGBI).
Efforts are also being made to support financial market stability and the economically vulnerable, such as delaying capital buffer regulations and reducing financial burdens on small businesses. Furthermore, initiatives for capital market modernization, including value upgrades and the resumption of short selling, will continue to be pursued.