{"id":2207485,"date":"2024-12-11T08:00:42","date_gmt":"2024-12-10T23:00:42","guid":{"rendered":"https:\/\/koreapro.org\/?p=2207485"},"modified":"2024-12-10T17:56:27","modified_gmt":"2024-12-10T08:56:27","slug":"south-koreas-finance-ministry-pledges-liquidity-measures-to-calm-market-fears","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2024\/12\/south-koreas-finance-ministry-pledges-liquidity-measures-to-calm-market-fears\/","title":{"rendered":"South Korea\u2019s finance ministry pledges liquidity measures to calm market fears"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">South Korea\u2019s finance ministry convened an <\/span><a href=\"https:\/\/www.moef.go.kr\/nw\/nes\/detailNesDtaView.do?searchBbsId1=MOSFBBS_000000000028&amp;searchNttId1=MOSF_000000000071679&amp;menuNo=4010100\"><span style=\"font-weight: 400;\">emergency meeting<\/span><\/a><span style=\"font-weight: 400;\"> on Tuesday morning to confront escalating volatility in financial and foreign exchange markets. Finance minister Choi Sang-mok vowed swift action, including \u201cunlimited\u201d liquidity injections and round-the-clock market monitoring. The ministry also highlighted the economy\u2019s resilience, pointing to robust fundamentals such as $415.4 billion in foreign reserves and a net external financial asset position of $977.8 billion as of September.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Market turbulence stems from intensifying political uncertainty, including President Yoon Suk-yeol\u2019s <\/span><a href=\"https:\/\/koreapro.org\/2024\/12\/timeline-the-swift-rise-and-fall-of-martial-law-in-south-korea\/\"><span style=\"font-weight: 400;\">martial law declaration<\/span><\/a><span style=\"font-weight: 400;\">, the <\/span><a href=\"https:\/\/koreapro.org\/2024\/12\/yoon-suk-yeols-fate-uncertain-as-impeachment-vote-fails-to-move-forward\/\"><span style=\"font-weight: 400;\">failure of the first round of impeachment<\/span><\/a><span style=\"font-weight: 400;\"> and the National Assembly\u2019s historic passage of an <\/span><a href=\"https:\/\/www.yna.co.kr\/view\/AKR20241210128500001\"><span style=\"font-weight: 400;\">opposition-led budget<\/span><\/a><span style=\"font-weight: 400;\"> on Tuesday afternoon. The\u00a0$2.87 billion (4.1 trillion won) in cuts \u2014 made without government consent \u2014 targeted contingency funds and special activity budgets. One of Yoon\u2019s justifications Yoon gave last week for declaring martial law was the main opposition Democratic Party\u2019s \u201cweaponization\u201d\u00a0 of the budget negotiation process.<\/span><\/p>\n<p><b>WHY IT MATTERS<\/b><\/p>\n<p><span style=\"font-weight: 400;\">The political instability driving South Korea\u2019s current market volatility presents a significant challenge to its economy. The opposition\u2019s unilateral budget decision, which could face Yoon\u2019s veto if he reneges on his <\/span><a href=\"https:\/\/koreapro.org\/2024\/12\/yoon-suk-yeol-avoids-impeachment-for-now-but-faces-rising-political-instability\/\"><span style=\"font-weight: 400;\">pledge to delegate governance<\/span><\/a><span style=\"font-weight: 400;\"> to the ruling People Power Party and Prime Minister Han Duck-soo, will likely amplify foreign investors\u2019 concerns about governance and fiscal discipline.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The opposition-led budget\u2019s cuts to contingency funds and treasury bond interest payments could limit the government\u2019s flexibility in responding to external shocks, potentially impacting its ability to counter market volatility. While South Korea maintains substantial foreign reserves and net external financial assets, these reserves are primarily designated for stabilizing the foreign exchange market and ensuring external liquidity.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Despite the government\u2019s assurances and intervention signals, the currency and bond markets remain sensitive to unfolding events. While the won-dollar exchange rate <\/span><a href=\"https:\/\/www.yna.co.kr\/view\/AKR20241210121000002\"><span style=\"font-weight: 400;\">slightly stabilized<\/span><\/a><span style=\"font-weight: 400;\"> on Tuesday, it remains vulnerable to further capital outflows. Unless quickly resolved, persistent political uncertainty may pose further challenges to South Korea\u2019s economy.<\/span><\/p>\n<div class=\"content-tags\"><a href=\"https:\/\/koreapro.org\/tag\/business-economy\/\"><span class=\"tag\">Business &amp; Economy<\/span><\/a><a href=\"https:\/\/koreapro.org\/tag\/domestic-politics\/\"><span class=\"tag\">Domestic Politics<\/span><\/a><\/div>","protected":false},"excerpt":{"rendered":"<p>South Korea\u2019s finance ministry convened an emergency meeting on Tuesday morning to confront escalating volatility in financial and foreign exchange markets. Finance minister Choi Sang-mok vowed swift action, including \u201cunlimited\u201d liquidity injections and round-the-clock market monitoring. The ministry also highlighted the economy\u2019s resilience, pointing to robust fundamentals such as $415.4 billion in foreign reserves and [&hellip;]<\/p>\n","protected":false},"author":10407,"featured_media":2207486,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[30],"tags":[24,27],"class_list":["post-2207485","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-briefings","tag-business-economy","tag-domestic-politics"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v23.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>South Korea\u2019s finance ministry pledges liquidity measures to calm market fears - KOREA PRO<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/koreapro.org\/2024\/12\/south-koreas-finance-ministry-pledges-liquidity-measures-to-calm-market-fears\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"South Korea\u2019s finance ministry pledges liquidity measures to calm market fears - KOREA PRO\" \/>\n<meta property=\"og:description\" content=\"South Korea\u2019s finance ministry convened an emergency meeting on Tuesday morning to confront escalating volatility in financial and foreign exchange markets. 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