Vice Minister of Economy and Finance: "Some Market Index Fluctuations Are Excessive but No Need for Panic" (Update)

Macroeconomic and Financial Meeting on the 10th
"Significant Difference from Past Global Liquidity Crisis Situations"

[Asia Economy Reporter Jang Sehee] Kim Yong-beom, the 1st Vice Minister of Strategy and Finance, emphasized regarding the increased volatility in the stock market due to the novel coronavirus infection (COVID-19) situation, "Although the fluctuations in some market indices are somewhat excessive, there is no need to harbor fear or anxiety that it might escalate into a systemic crisis."

On the 10th, Vice Minister Kim held a macroeconomic financial meeting at the Seoul Banking Hall and stated, "This shock did not start from a sudden deterioration of vulnerabilities and imbalances inherent in the financial system, which is a significant difference from past global liquidity crisis situations."

The government mentioned that it has established a financial safety net in response to market instability. He explained, "The record-high level of foreign exchange reserves, the scale of net external claims, sound foreign currency liquidity of financial institutions, and currency swaps exceeding 130 billion dollars serve as a breakwater protecting our economy from a foreign exchange crisis."

He added, "However, since global financial market volatility is expected to continue for a considerable period depending on how the situation unfolds, we will thoroughly inspect the factors causing domestic and international market instability in each sector." He also said, "It is time to make every effort to prepare so that we can respond promptly and appropriately in case of emergency."

Vice Minister Kim further diagnosed, "The won-dollar exchange rate has exceeded 1,200 won due to the worsening domestic and international COVID-19 situation and the sharp drop in international oil prices, resulting in overall increased market volatility."

He analyzed, "The Dow Jones Industrial Average, which recorded its highest point in history just 13 days ago, has plummeted by 19.3% in such a short period, while long-term interest rates, oil prices, and the volatility (VIX) index have surged. This can be summarized by several factors, including the rapid spread and unpredictable nature of COVID-19, which increase global market uncertainty."

Additionally, he said, "Concerns are spreading that the negative impact of COVID-19 on the global real economy will be deeper and longer-lasting than initially expected. There is also a factor of a sharp readjustment of global asset prices, which had been overvalued for a long time compared to fundamentals."

Finally, Vice Minister Kim emphasized, "The government will prioritize quarantine and securing public safety above all else under the recognition that there is no economy without quarantine."

This content was produced with the assistance of AI translation services.