South Korea will immediately activate additional foreign exchange stabilization measures so the Korean won is not affected by a current-account deficit and ready a safety net for the stock market on expectations of a lengthening in the “insecure external environment.”

An emergency economy meeting was headed by President Yoon Suk-yeol on Friday after the country’s current-account balance delivered a deficit of $3.05 billion to face a twin deficit with a fiscal deficit that may further scare away foreign capital and weaken the won, according to a press release from the Ministry of Finance and Economy.

“The multiple crises that our nation is facing is expected to continue for a while which is why the government needs to prepare policies that will act as a ‘safety net’ to ease the concerns of the citizens,” said Yoon in his opening remarks.

“We will push to boost exports, strengthen competitiveness in the service industry, and enhance energy efficiency so that we can reduce imports,” said Yoon.

“We must come up with more detailed measures to improve our current balance across various areas such as tourism and logistics,” he added.

The government will ready financial measures in addition to the $10 billion won-dollar swap deal which allows the National Pension Service (NPS) to borrow up to $10 billion from foreign reserves held by the Bank of Korea until the end of this year to help ease the dollar demand at home.

“Additional actions will be taken immediately if forex market and liquidity conditions call for attention,” the ministry said.

Financial authorities are readying to activate 10 trillion won worth stock market stabilization fund during October that can be injected into the stock market if it experiences further declines.

The government will also overhaul outdated regulations and systems to encourage stock investments by foreigners and make efforts to attract more foreign capital into the domestic capital market.

By Susan Lee

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]