South Korea’s Central Bank Vows to Stabilize Markets Amid Political Turmoil
(Bloomberg) -- South Korea’s central bank vowed to stabilize financial markets and highlighted the importance of “uninterrupted implementation” of key fiscal and economic measures, in its first statement since lawmakers voted to impeach President Yoon Suk Yeol.
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“The Bank of Korea intends to utilize all available policy instruments, in conjunction with the government, to respond to and avert an escalation of volatility in financial and foreign exchange markets,” the central bank said on Sunday, addressing the fallout of Yoon’s failed martial law decree earlier this month.
Comparing the current situation with the impeachment phases of past presidents, the BOK said the latest case is “characterized by greater external challenges, such as heightened uncertainty in the trading environment and intensified global competition.”
“Should these external factors overlap with domestic ones, their impact may amplify,” the BOK said, calling for an interventionist approach to improving the economy. In the days after Yoon’s martial law declaration, the stock market plunged and the South Korean won at one point tumbled against the dollar to the worst level since the global financial crisis.
The central bank’s message comes after South Korea’s parliament on Saturday voted to oust Yoon from office, a decision that must now be reviewed by the Constitutional Court. After the ballot, Prime Minister Han Duck-soo, who’s serving as acting president, asked his advisers to step up their monitoring of financial markets, calling for “swift and bold” stabilizing steps if needed.
Watch: 5 Things to Know After President Yoon’s Impeachment
“Predictability of the political process is expected to improve going forward and financial market volatility is anticipated to reduce” following the impeachment vote, the central bank said in its statement.
Separately, Finance Minister Choi Sang-mok pledged to work actively with parliament to manage the economy and ensure that it is stable. Before the year ends, the government will also announce policy directions for next year, Choi said. That may include the latest growth forecasts, which reflect the effects of the martial-law turmoil.
South Korea’s main opposition leader, Lee Jae-myung, also underscored the importance of restoring normalcy. Lee proposed creating a bipartisan body involving parliament and the government to discuss ways to stabilize the state and boost the economy.
“What we need to discuss right now is slumping domestic demand and the slowdown in the economy due to the shrinking fiscal role of the government,” Lee said at a press conference on Sunday. “In order to solve this problem, I think we need to discuss the supplementary budget swiftly.”
The Constitutional Court has 180 days to rule on the validity of the impeachment motion passed on Saturday. If the court moves forward with removing Yoon, presidential elections must be held within 60 days.
(Adds finance minister’s comments in seventh paragraph.)
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