(LEAD) BOK calls for vigilance on market volatility following holiday

All News 10:17 February 03, 2022

(ATTN: UPDATES with more info in paras 6, 7, 9, 10)

SEOUL, Feb. 3 (Yonhap) -- South Korea should stay vigilant on the possibility of heightening financial market volatility amid persistent worries over inflation in major economies and other risk factors, though the markets showed signs of stability in recent days, a senior central bank official said Thursday.

The Bank of Korea (BOK) held a meeting to monitor global financial market situations following the five-day Lunar New Year holiday that ended on Wednesday during which local stock and currency markets were closed. The meeting was presided over by BOK Vice Gov. Lee Seung-heon.

"During the Lunar New Year holiday, international financial markets appear to have remained stable as a whole," Lee was quoted as saying at the meeting.

"But we should not let our guard down and keep close tabs on developments of global risks and their possible impacts on local financial markets and economy," he added.

Lee cited major economies' stepped-up pace of monitory policy normalization, geopolitical risks, such as rising tensions between Ukraine and Russia, and uncertainty over inflation and economic conditions of major economies as factors that could heighten market volatility.

The country's finance ministry issued a similar assessment, saying the government will closely monitor a possible increase in market volatility.

"The government plans to take measures to stabilize the market in a timely manner if needed," First Vice Finance Minister Lee Eog-weon said in a government meeting on the macroeconomics.

The BOK said that investors became less risk averse during the holiday, sending major stock indexes and interest rates in advanced economies higher. Improved corporate earnings and bargain hunting for oversold stocks in the U.S. also bolstered its stock markets.

On Thursday, South Korean stocks also got off to a strong start. The benchmark KOSPI traded 57.91 points higher, or up 2.17 percent, at 2,721.25 as of 9:54 a.m.

The won also gained ground against the dollar following its recent steep declines. The Korean currency was trading at 1,205.40 won per the greenback, up 0.1 won from the previous session.