Seoul, April 7 (IANS) The South Korean market could face heightened volatility for a longer-than-expected period due to the Donald Trump administration’s sweeping tariff policy, the central bank said on Monday, calling for prompt implementation of market stabilisation measures when necessary.
Bank of Korea (BOK) Deputy Gov. Ryoo Sang-dai made the assessment during an emergency task force meeting meant to review market conditions after Trump’s tariff measures have affected the stock and foreign exchange markets at home and abroad, reports Yonhap news agency.
“Uncertainties surrounding the U.S.’ path regarding its tariff policies remain high and such a situation may be prolonged longer than expected. It is essential to closely monitor the financial and foreign exchange markets through a 24-hour surveillance system and promptly implement market stabilisation measures when necessary,” Ryoo said.
Trump vowed to impose “reciprocal” tariffs on imports from most of the world, including 25 percent duties on South Korean goods, which are set to take effect on Wednesday (U.S. time). He also implemented a 10 percent “baseline” tariff on foreign imports starting Saturday.
Ryoo and other officials said the recent tariff scheme was “strong,” and the move is feared to spark a global trade dispute, according to the BOK.
Trump’s tariff policy battered the local stock market Monday, with the benchmark Korea Composite Stock Price Index (KOSPI) sinking more than 4 percent as of 11:30 a.m.
The South Korean currency also traded markedly lower against the U.S. dollar, nearing the 1,470 won mark, a level unseen in about 16 years since 2009.
South Korea’s economy is facing “mounting” downside risks due to sluggish production and heightened trade uncertainties sparked by U.S. tariffs, a state-run economic think tank said on Monday.
“Recently, the Korean economy is facing mounting downward pressure as weakened growth in domestic and external demand has weighed on production and U.S. tariff hikes have exacerbated global trade uncertainties,” the Korea Development Institute (KDI) said in its monthly economic assessment report.
The KDI has now noted downside risks for Asia’s fourth-largest economy for the fourth consecutive month.
While equipment investment remains on a solid trajectory, continued sluggishness in construction investment and weak consumption growth are limiting the pace of domestic demand recovery, the KDI said.
—IANS
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