Kim Yong-beom, presidential policy chief at the Presidential Office, said on the 2nd that the recent stock market decline and exchange rate surge triggered by Middle East tensions have instead served as "an occasion to confirm the resilience of the Korean market," forecasting that financial markets would recover soon.
"Indices such as the KOSPI, which were distorted by external factors, are highly likely to converge toward fundamentals, and the exchange rate will also gradually return to a stable range as supply and demand normalize," Kim wrote in a Facebook post.
Regarding foreign investors' selling spree in the stock market, Kim analyzed that "profit-taking desires that had built up as indices climbed steeply played a role," adding that "concerns over the impact of the Middle East situation on the Korean economy, which has high energy dependence, were also partly reflected."
"The key point is that the Korean stock market held the KOSPI 5,000 line and withstood the shock amid record-level storm selling and the massive impact of the Middle East war," he said. "This demonstrated that the market has structural resilience to endure shocks."
He emphasized that "rather than an event exposing market vulnerability, this was closer to a stress test that confirmed the floor under extreme conditions." He added that "the view is gaining traction in the market that this sharp drop was not a fundamental collapse but a panic-driven correction combining geopolitical risk and supply-demand factors."
On the exchange rate rise, Kim characterized it as "different in nature from a traditional foreign exchange crisis pattern," calling it "a typical supply-demand shock-driven rise in which selling proceeds were converted into dollar demand in a short period, pushing the exchange rate higher."
"This is the result of supply-demand distortions originating from the stock market being temporarily reflected in the foreign exchange market," he said. "If external shocks ease and supply-demand conditions normalize, there is sufficient room for the exchange rate to return to its previous band."
Kim stressed that "the Korean economy's fundamental strength remains solid," noting that "export competitiveness in key industries such as semiconductors, shipbuilding and defense is being maintained, and sectors including energy, plant engineering and construction that can handle post-war reconstruction demand are also well positioned."
He added, "In the future, March 2026 will be recorded as the period when the Korean stock market proved its resilience by enduring a severe stress test."