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(LEAD) Moon pledges strong steps to stabilize bond, stock markets

All News 14:38 March 20, 2020

(ATTN: UPDATES with details from 7th para)

SEOUL, March 20 (Yonhap) -- Emboldened by the establishment of a US$60 billion currency swap line with the United States, President Moon Jae-in said Friday his administration would take "powerful" measures to stabilize the bond and stock markets as well.

He called the deal an accomplishment resulting from coordination between the monetary and fiscal authorities of the two sides. He thanked the U.S. for the decision on his Facebook account.

Moon praised the Bank of Korea (BOK) and the Ministry of Economy and Finance for their roles in "international coordination" and "domestic support," respectively.

In particular, the BOK has enhanced its stature by responding to various economic situations in a responsible manner on the basis of its independence and expertise.

"I view the accomplishment this time as its result," he added.

Following the move that helped mitigate instability in the foreign exchange market, the government will "map out powerful measures for the stabilization of the bond and stock markets," Moon said, as South Korea's capital market has been rocked by the coronavirus crisis.

President Moon Jae-in holds an emergency economic council meeting at Cheong Wa Dae on March 19, 2020. (Yonhap)

President Moon Jae-in holds an emergency economic council meeting at Cheong Wa Dae on March 19, 2020. (Yonhap)

Moon is expected to unveil a set of related measures when he presides over the second meeting of the "emergency economic council" next week. Cheong Wa Dae has not made the date public yet.

The government reportedly plans to reintroduce a bond market stabilization fund (BMSF) and activate a stock market stabilization fund.

South Korea operated a 10-trillion-won (USS8 billion) BMSF at the time of the 2008 global financial crisis. Observers say the government wants to make it bigger this time.

In the inaugural session of the ad hoc council Thursday, Moon vowed a 50 trillion-won emergency financing package to help small and medium-sized firms and the self-employed hard hit by the COVID-19 pandemic.

The bilateral liquidity-swap deal, announced not long after the council meeting, enables the BOK to exchange won for dollars with the Federal Reserve, if necessary, for at least half a year.

The South Korean currency rose sharply and its shares rebounded Friday on the news.


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