The nominee for Deputy Prime Minister for Economy Yim Jong-yong on Monday declared a state of emergency for South Korea’s economy, and ordered the implementation of contingency measures for the financial and foreign exchange markets to guard against risks.
Presiding over an emergency meeting on financial market conditions, Yim, who is designated to double as the strategy and finance minister, decried the current status of the Korean economy and financial market as being “in a crisis.”
“The economy is in a highly dangerous situation -- we’re on thin ice,” Yim said.
The current chairman of the Financial Services Commission was nominated by President Park Geun-hye as the next chief for the country’s economy last Wednesday in a surprise government reshuffle amid the ongoing presidential scandal.
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Yim Jong-yong, the nominee for deputy prime minister for economy, speaks at an emergency meeting on financial market conditions at the Seoul government complex in Gwanghwamun, central Seoul on Monday. ( Financial Services Commission) |
As uncertainties have grown on the global financial market, Seoul is experiencing increasing volatilities in its stock and foreign exchange markets, the nominee said.
The country’s main bourse Kospi has lost about 3 percent from September. The Korean won has lost about 3.8 percent in value against the US dollar during the same period.
The export-driven open economy has always been vulnerable to external risks, because its exports are highly dependent on economic conditions of major trading partners such as the US and China, while about 30 percent of its stock market is bolstered by foreign capital.
“Since the beginning of the year, external risks such as the US rate hike possibility, financial problems at European banks and Brexit scenario have been plaguing our financial market,” Yim said.
Yim’s sense of crisis echoes that of market watchers, who have also pointed to the imminent risk factor from the US presidential election slated for Tuesday.
Lee Kyung-min, an analyst at Daishin Securities, said: “It is inevitable to face falling stock prices this week due to the US election. The lowest possible level for the Kospi to support investors is estimated to be 1,940.”
During the meeting, the nominee noted that along with the financial anxieties stemming from external factors, the economy is suffering from falling exports and anemic growths in consumption and jobs amid rising household debt and ongoing corporate restructuring activities.
Yim emphasized that stabilizing the financial market is a key priority, a task that can never be abandoned especially in the face of economic crisis.
While maintaining his previous stance on the household debt issue -- tougher screenings for borrowers and crackdowns on unusual increases in loan issuances by financial institutions -- financial authorities will enhance the country’s foreign exchange market by preventing excessive tilting in demand of foreign currencies, the nominee said.
“The government will try to secure stability in the FX and financial markets by proactively communicating with global credit rating agencies, major foreign investors and international organizations,” Yim said.
He ordered the Financial Supervisory Service to have local banks secure highly liquid foreign assets in stocks in preparation against looming global uncertainties.
In order to respond to the expected market volatilities, chief executive officers of local stock brokerage firms gathered later Monday to discuss contingency measures on their own to minimize losses for consumers.
By Song Su-hyun (
song@heraldcorp.com)
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