The Ministry of Economy and Finance (MOEF), the Bank of Korea (BOK), the Financial Services Commission (FSC), and the Financial Supervisory Service (FSS) held an Emergency Meeting on Macroeconomic and Financial Issues[1] at the Korea Federation of Banks on December 30. Presided over by Governor of the BOK, the meeting reviewed the current status of financial and foreign exchange (FX) markets and discussed future response strategies.

Before the discussion, the participants expressed their deep condolences to the victims and their families affected by the Jeju Air plane crash that occurred yesterday (Dec 29).

The participants assessed that financial and FX market volatility has increased, as evidenced by the rise in exchange rates following the passage of the impeachment motion against the Prime Minister in the National Assembly last week (Dec 27). They agreed that relevant agencies would work closely together to monitor market conditions around the clock and spare no effort in utilizing all available measures to manage the financial and FX markets as stably as possible.

However, the participants noted that the international community is watching whether Korea’s national governance can quickly regain stability; if the current state of instability persists, it could negatively impact Korea’s external credibility and lead to direct and indirect shocks to the overall economy. Therefore, they emphasized the critical importance of swiftly stabilizing the domestic political situation.

At the same time, the participants shared the view that the government and the BOK still possess sufficient capacity to respond, considering Korea’s net external financial assets of approximately $977.8 billion (as of Q3 2024), the world’s 9^th largest FX reserves at $415.4 billion (as of November 2024), and about 27 trillion won in remaining market stabilization program funds, including the Bond Market Stabilization Fund (as of end-November 2024). They agreed to implement additional market stabilization measures promptly in the event of excessive one-sided movements in the market.

In addition, the BOK purchased repurchase agreements (RPs) worth 5 trillion won, bringing the total short-term liquidity supplied since December 4 to 38.6 trillion won as of December 30. The BOK committed to taking immediate additional actions if necessary to ensure market stability and improve short-term funding conditions going forward.

Furthermore, efforts to improve FX supply and demand will soon be announced and implemented as part of the 2025 Economic Policy Directions, including expanding infrastructure for foreign investors in Korean government bonds, enhancing FX market infrastructure and accessibility to align with global standards, and promoting foreign direct investment (FDI).