Seoul, Dec 15 (IANS) The financial authorities said on Monday that they will take bold, preemptive measures to rein in market volatility amid the falling Korean won and soaring bond yields.

In a meeting with private experts and high ranking officials from related government agencies, Lee Eog-weon, chairman of the Financial Services Commission (FSC), said the country’s financial markets had shown signs of stability during the second half of the year on an improvement in economic conditions and a bull run on the stock market, reports Yonhap news agency.

But recently, bond yields have been on an upside path and the currency market suffered increased volatility.

“Despite increased market volatility, the country’s economic resilience is strong enough to shake off risks,” Lee said citing financial firms’ financial soundness, ample foreign reserves and low credit risks.

Bond yields have been soaring after the Bank of Korea (BOK) froze its key rate at 2.5 per cent late last month to safeguard financial stability amid a weakened local currency and an unstable housing market.

But market players bet that the central bank’s easing cycle has come to an end, or may be protracted.

The Korean won ended at 1,473.7 won against the U.S. dollar on Friday, nearing the 1,500 won level.

As part of efforts to calm the market volatility, the authorities decided to extend the bond market stabilization scheme through next year.

The FSC said 38 trillion won ($25.7 billion) worth of bond market stabilization funds, along with 61 trillion won in real estate project financing measures, will be extended through next year.

The FSC chief also said household debts, real estate-related loans and other potential risks have been well managed.

“But there are the chances of market volatility increasing down the road, and we are ready to take bold, preemptive actions, if necessary, while closely monitoring market conditions.”

–IANS

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