BOK monitoring BOJ's surprise stimulus

Published : Nov 3, 2014 - 22:25 Updated : Nov 3, 2014 - 22:25

South Korea's central bank said Monday it is closely monitoring the impact of Japan's further monetary easing and vowed to block one-sided market expectation.

On Friday, the Bank of Japan (BOJ) stunned the market by announcing it will ramp up its already sizable stimulus, sending the yen sharply lower against the U.S. dollar and also causing a sharp slide in the Korean won against the greenback.

Japan's central bank said it will jack up its asset purchases by up to 20 trillion yen to some 80 trillion won in order to boost the sagging growth in the world's No. 3 economy.

In a statement, the Bank of Korea said that key members led by Bank of Korea (BOK) Senior Deputy Gov. Jang Byung-hwa convened a meeting in which they discussed growing volatility in the foreign exchange market and agreed to step up efforts to prevent market expectation becoming one-sided.

The central bank plans to keep close tabs on the impact of the additional easing on South Korea's economy and financial market, it added.

The meeting is the first in kind to be held since Sept. 18, when BOK officials convened following the Federal Open Market Committee sessions that had raised the specter of a U.S. rate hike earlier than expected. The home currency weakened 8.5 won on that day.

The latest meeting comes as Japan's surprise move stoked fears that the weakening yen may hurt local manufacturers.

The local currency has sharply weakened against the U.S. dollar following the BOJ move, with the Korean won ending at a near one-month low of 1,072.60 won against the U.S. dollar, down 4.10 won from the previous close.

Earlier in the day, BOK Gov. Lee Ju-yeol also told reporters that the central bank is closely monitoring the situation, with a focus on currency.

"The additional monetary easing came earlier than market expectations. We're closely monitoring it," said Lee.

(Yonhap)