South Korea will intensify its market monitoring on fears that volatility could deepen in the wake of the U.S. Fed’s decision to make an additional cut to its bond purchase stimulus efforts, a senior economic policymaker said Friday.
“We will step up our monitoring on expectations that the situations of market volatility deepening will persist throughout this year,” Vice Finance Minister Choo Kyung-ho said at a meeting with other policymakers to review the latest financial and economic situations in Seoul.
“Fortunately, (the tapering) has less impact on South Korea, but we cannot stay complacent,” he said. “If necessary, we will react in a preemptive manner.”
Last week, the U.S. Federal Reserve decided again to cut its monthly bond purchase program ― put into place to stimulate the economy by injecting liquidity into the market ― by $10 billion to $65 billion in February. The Fed already reduced bond purchases from $85 billion to $75 billion in January.
Concerns linger that the U.S. move to ease up on its quantitative easing could spark a massive capital outflow from emerging markets whose financial systems remain fragile to external risks.
Earlier this week, such global jitters caused South Korea’s stock market to fall sharply, but it regained some stability later in the week as concerns over emerging markets eased.
As for labor market statistics to be unveiled by the U.S. on Friday, Choo said job and inflation data are major figures that affect the Fed’s policymaking directions the most. “We are closely monitoring the overall trend of U.S. employment data.” (Yonhap)
