Finance Minister Koo Yun-cheol pledged to respond swiftly if the Korean won's movements deviate excessively from economic fundamentals, as the currency breached the 1,500-per-dollar level again on the 19th.
"We are closely monitoring the foreign exchange market with heightened vigilance," Koo said while chairing an expanded macroeconomic and financial meeting at the Seoul Bank Hall. "We will respond in a timely manner if the won's movement shows excessive divergence from fundamentals."
The won has surged to its highest level since the financial crisis, hovering around 1,500 per dollar amid escalating Middle East tensions, soaring oil prices, and dollar strength.
"Domestic financial and foreign exchange markets have experienced continued volatility since the Middle East situation emerged," Koo said.
On the bond market, the minister emphasized that the government and the Bank of Korea will coordinate to implement market stabilization measures such as emergency buybacks and outright purchases of government bonds when necessary. He added that public bond issuance, including treasury bonds, would be flexibly adjusted through the "Bond Issuing Institutions Council" in the second quarter depending on market conditions.
Regarding the volatile stock market, Koo noted that Korean equities still show higher gains compared to major countries since the beginning of the year, and corporate bond credit spreads indicating corporate financing conditions remain stable.
"The government and related agencies will do everything possible to stabilize markets while keeping the worst-case scenario in mind, and will also accelerate efforts to strengthen fundamentals," he added.
The Returning Investment Account (RIA) and individual investor forward exchange sales products, which passed the National Assembly's Legislation and Judiciary Committee the previous day, are expected to launch in March, with follow-up legislation to be completed swiftly after the bill's passage, Koo said.
Meeting participants including Bank of Korea Governor Lee Chang-yong, Financial Supervisory Service Governor Lee Chan-jin, and Financial Services Commission Vice Chairman Kwon Dae-young assessed that a supplementary budget funded by excess tax revenue without issuing deficit bonds would have limited impact on prices and financial and foreign exchange markets, given that the GDP gap remains negative and aggregate demand pressure is low.
The Ministry of Finance and Economy explained that participants agreed that focusing direct and differentiated support on vulnerable groups and regions heavily affected by high oil prices would be effective.