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

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(Globalpost/GlobalPost)

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 stimulate 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.

Shin Je-yoon, the chairman of the Financial Services Commission (FSC), the country's top financial regulator, 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 at an award event held at the Korea Exchange.

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 "preemptively" cope with ramifications stemming from moves to ease quantitative easing efforts.

Meanwhile, FSC Chairman Shin awarded Doosan Heavy Industries Co., a heavy equipment maker, the best company prize for 2013, as selected by the Korea Corporate Governance Service for its efforts to guarantee outside directors' independence from the management and to improve transparency.

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