Amid political turmoil, the Bank of Korea said it will enhance short-term liquidity and deploy measures to stabilize the foreign exchange market.
The Bank of Korea sign is displayed atop the central bank headquarters building in Seoul, South Korea, on Thursday, August 16, 2018. The Bank of Korea raised interest rates in second straight meeting on Thursday to ease consumer inflation from 13-year high and further raise forecasts of prices rising to the highest level since 2008.
Jean Chung | Bloomberg | Getty Images
Bank of Korea said on Wednesday that it will boost short-term liquidity and deploy foreign exchange market stabilization measures as needed, after South Korean President Yoon Suk Yeol lifted his sudden declaration of martial law overnight.
The announcement came shortly after the BOK held an emergency council meeting, which began at around 9 a.m. local time. In a statement released after the meeting, The central bank said it would also make available any special loans to inject capital into the market, if needed.
“As announced jointly with the government, we will provide sufficient liquidity for a limited period until the financial and foreign exchange markets stabilize,” Bank of Korea said. reiterate the commitment made earlier in the day by South Korean Finance Minister Choi Sang-mok.
Local news agency Yonhap reported Last Wednesday, South Korea’s financial regulator said it was ready to allocate 10 trillion won ($7.07 billion) to the stock market stabilization fund at any time.
Yoon declared a state of emergency martial law and mobilized the military on Tuesday night. Within hours, the National Assembly voted to repeal the emergency order, forcing Yoon to lift martial law early Wednesday morning. Deployed military units have also been withdrawn, Mr. Yoon announced at the time.
“In our view, the negative impact on the economy and financial markets is likely to be short-lived due to economic uncertainties. [the] The political and economic environment can be quickly mitigated by a proactive policy response,” Citi analysts said in a note.
Korean stocks undergone significant changes in the US on Tuesday amid political unrest in South Korea. the iShares MSCI Korea ETF (EWY)which tracks more than 90 large and mid-sized companies in South Korea, fell as much as 7% to a 52-week low before trimming losses to close 1.6% lower.
Last week, BOK cuts benchmark interest rate by 25 basis points in a surprise move.
The Korean stock market begins trading at 9 a.m. KST as usual.
