Korean financial authorities note market uncertainties following Fed's aggressive rate hike

The financial authorities acknowledged increased market uncertainties on Thursday following another aggressive rate hike by the Fed and recent provocations by North Korea.

Finance Minister Choo Kyung-ho, second from left, and Bank of Korea Gov. Rhee Chang-yong, left, before attending a meeting held Thursday morning [NEWS1]

The financial authorities acknowledged increased market uncertainties on Thursday following another aggressive rate hike by the Fed and recent provocations by North Korea.

Following the U.S. Federal Reserve’s fourth consecutive rate increase, by 75 basis points Wednesday, Korean financial authorities held a meeting to discuss its impacts and the uncertainties raised by North Korea’s recent firing of ballistic missiles.

The Fed’s policy decision has set the target federal funds rate in a range between 3.75 and 4.00 percent, the highest since early 2009.

The meeting was attended by Finance Minister Choo Kyung-ho, Bank of Korea Gov. Rhee Chang-yong, Financial Services Commission Chairman Kim Joo-hyun and Financial Supervisory Service Gov. Lee Bok-hyun in central Seoul on Thursday.

“The participants agreed to respond while maintaining a high level of vigilance as uncertainties on our market and the global financial market have grown following the Fed’s rate increase,” read the statement from the Finance Ministry.

It added that the impacts on the domestic market of North Korea’s firing of ballistic missiles seems limited at this point considering the response by the international financial market, though ensuring the authorities will stay vigilant also in regards to North Korea-related risks.

In a separate meeting hosted by Bank of Korea Deputy Gov. Lee Seung-heon on the same day, the central bank said the Fed’s latest decision on the rate raises caution on the side of Korea’s financial and foreign exchange markets.

Lee said the bank will strengthen the monitoring of the currency exchange rate and the inflow and outflow of capital.

In a press conference Wednesday, Fed Chairman Jerome Powell said that the thoughts of a potential pause of rate increase would be “very premature.”

The Kospi opened lower Thursday, falling as low as 1.73 percent in intra-day trading, and the won-dollar exchange rate falling as low as 0.77 percent.

BY JIN MIN-JI [jin.minji@joongang.co.kr]