Seoul remains steadfast in ensuring post-impeachment market stability

South Korea's financial authorities reaffirmed on Sunday that they will remain vigilant to ensure market stability and stave off any fallout from the ouster of President Park Geun-hye.

The Constitutional Court delivered a verdict on Friday to dismiss Park over a high-profile corruption scandal involving her friend, after months-long political chaos. But the ruling is also the start of another turbulent period for Asia's fourth-largest economy as the country is still deeply divided over the ouster of Park and set to jump into an early presidential election in early May.

"Ahead of the impeachment ruling, there have been concerns (about market instability), but the local financial markets remained calm," Yim Jong-yong, chairman of the Financial Services Commission, the country's top financial regulator, said in a meeting with senior officials.

The Constitutional Court's ruling cleared uncertainties hanging over the local financial markets, and "the general situation is that private spending and investor sentiment will recover," he said.

But the chief regulator stressed that the authorities will remain firm in dealing with any potential market instability.

The benchmark Korea Composite Stock Price Index rose 0.3 percent to close at 2,097.35 hours after the verdict. The local currency also strengthened to 1,157.40 won against the US dollar from 1,158.2 won in the previous session.

The credit default swaps premium for foreign exchange stabilization bonds dropped 2.1 basis points to 47.1 basis points.

The country's chief economic policymaker also said the court ruling has had limited consequence on the local stock market so far, but the economy is still faced with a growing trade dispute and a much-awaited rate hike in the US.

"We need to help prevent economic players' uncertainties from further spreading with a set of delicate measures," Finance Minister Yoo Il-ho told an economy minister-level meeting.

The Federal Reserve is set to decide this week whether to raise interest rates in the world's largest economy with many expecting the central bank to jack up the rates given sound economic data.

Meanwhile, Yim also said the government will extend a policy loan worth 200 billion won ($173 million) to local tourism and related firms whose business have been hit by a growing spat with China over the deployment of a US missile defense system in South Korea.

Seoul agreed to host the Terminal High Altitude Area Defense system on its soil in July last year. Beijing has strongly denounced the deployment, claiming that its high-power radar will be used to spy on its military.

Early this month, South Korea's biggest trading partner banned the sale of tour packages and subsequently forbade local air carriers from increasing Korea-bound flights, among other restrictions.

Such a slew of retaliatory policies have stoked concerns that local tourism and retail firms will bear the brunt of the deepening diplomatic feud.

Last year, Chinese tourists accounted for nearly half of some 17.2 million foreigners who visited South Korea. (Yonhap)