Managing risks from N. Korea is Seoul’s priority for economy

Short term, it is difficult to expect markets to recover fast (from North Korea-related jitters).

Hwang Kun-il

SEJONG: South Korea’s currency chief said his top priority is managing risks to the country’s financial markets from rising tensions over North Korea, as the won slid to a sixweek low.

Increasingly harsh exchanges between North Korea and the US have unnerved foreign investors in recent weeks, with both South Korea’s central bank and the finance ministry warning that further provocations could lead to sudden capital outflows.

“For now, managing risks (related to North Korea) and making sure that our sovereign credit rating stands unscathed are our top priorities,” deputy finance minister Hwang Kun-il told Reuters in Sejong, south of Seoul.

“Short term, it is difficult to expect markets to recover fast (from North Korea-related jitters),” Hwang said, adding that his team would be on standby to provide policy responses to any escalations that occur over the long Chuseok holiday from Oct 2 through Oct 9, when local financial markets would be closed. Foreign investors ended a seven-month long buying spree and turned into net sellers of South Korean bonds in August. The yield on three-year treasury bonds rose 25 basis points to 1.832% yesterday amid a multi-trillion won selloff this week.

They also unloaded 2.4 trillion won (US$2.11 bil) of South Korean stocks in August after buying 5.8 trillion won worth in July, data from the Financial Supervisory Service showed.

The won closed at a six-week low yesterday.