S. Korea prepared to take immediate action against deepening market volatility

SEOUL, June 21 (Yonhap) -- South Korea is prepared to take action "immediately" against deepening market volatility caused by worries that the U.S. could reduce its quantitative easing policy, the country's top economic policymaker said Friday.

The remarks by Finance Minister Hyun Oh-seok came after the stock and currency markets here were rattled for the second straight day following U.S. Fed Chairman Ben Bernanke's comments that Washington could ease back its bond-buying program.

The program has helped the U.S. keep its interest rates at record lows by injecting money into the market and stimulating its economy.

"In preparation for possibly deepening market volatility, (we) will respond immediately, if necessary, under contingency plans tailored for each different scenario," Hyun told a meeting with other policymakers.

Hyun said that Bernanke's remarks could help lift some uncertainty hanging over the market about the future policy direction of the U.S. but worried that they could also spark capital outflows especially from emerging markets.

"We will remain on standby and be prepared to take immediate action in accordance with our contingency plans," he noted.

As for the economy management blueprint that the government is mapping out for the second half, he said that the plan will be focused on "breaking the country's low growth trend."

Hyun added that the government will also focus on building a countermeasure system through which it can "pre-emptively" cope with ramifications stemming from moves to ease quantitative easing efforts.

Shin Je-yoon, the chairman of the Financial Services Commission (FSC), the country's top financial regulator, even hinted at taking a possible counteraction to stabilize the market early next week.

"We'll keep a close check on the New York market tonight and if deemed necessary, we can take measures (to ease the market)," he told reporters after attending an event in Seoul.

Meanwhile, the government said that it will convene an emergency meeting of financial authorities on Sunday to review the latest economic and market situations unfolding in the wake of Bernanke's remarks on the possible decrease in quantitative easing.

The meeting will be attended by high-ranking officials from the finance ministry, the FSC, the Financial Supervisory Service and the Bank of Korea.

"The main objective of this meeting is not to come up with any immediate countermeasures but check the overall situations together with relevant ministries and agencies," a finance ministry official said.

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