Finance minister says recent volatility in financial, FX markets ‘excessive’

South Korea’s top economic policymaker said Tuesday that the recent volatility in the country’s financial and foreign exchange markets is “excessive” given the nation’s strong economic fundamentals.

The Korean won weakened sharply in recent sessions to below the 1,440 won level, the lowest in more than two years, and the benchmark Korea Composite Stock Price Index (KOSPI) had sunk on heavy foreign selling following President Yoon Suk yeol’s surprise imposition of martial law last week.

“Although volatility in the financial and foreign exchange markets has increased, it appears somewhat excessive compared to the robust fundamentals and external stability of our economy,” Finance Minister Choi Sang-mok said.

Choi made the remarks during a daily emergency meeting with top economic and financial officials, amid heightened uncertainty stemming from Yoon’s martial law declaration, which was swiftly overturned by the National Assembly just hours after its announcement.

The ministry added that institutional investors have recently turned into net buyers in the stock market, while foreign investors are showing renewed interest in low-priced assets.

Choi encouraged individual investors to adopt a more measured perspective in their decision-making.

Choi highlighted South Korea’s ample market response capacity in the foreign exchange market, citing its substantial foreign reserves of US$415.4 billion as of September.

Participants in the meeting agreed to closely monitor market trends and deploy all available market stabilization measures as needed.

Since the turmoil on Dec. 3, the government has pledged to inject “unlimited liquidity” into the financial system if necessary, and the Bank of Korea has already begun repo operations to provide support to financial institutions.

Following authorities’ efforts to settle the market, the Korean won rose 10.1 won from the previous session to be quoted at 1,426.9 won against the U.S. dollar at 3:30 p.m.

The KOSPI jumped 2.43 percent to finish at 2,417.84 on Tuesday.