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South Korea to Act Firmly if Trump Election Volatility is Severe

By November 9, 2016 at 2:52 pm
Donald Trump Holds Campaign Rally In Nevada (Photo : Getty Images By Ethan Miller)

South Korea said Wednesday that it will firmly react to severe financial market volatility if necessary after Republican Donald Trump shocked the world by winning the U.S. presidential race, sending global markets plunging.

Both the government and central bank stated that they plan to increase monitoring of markets around the clock.

"We plan to consider ways to provide market liquidity through a number of methods, including issuing foreign currency bonds, flexible use of macroprudential measures, and foreign currency funding for the private sector," said Finance Minister Yoo Il-ho during a meeting to discuss the election.

The nation's stocks dropped to their lowest level in the last four months while the South Korean won scored its largest daily fall since mid-September.

In Vice-Finance Minister Choi Sang-mok's opening remarks ahead of an important meeting between the government, central bank and other finance-related officials regarding the matter, he urged market participants to remain calm with regard to the outcome of the U.S. presidential election.

"Excessive volatility in the markets is not desirable,"said Choi. "We will take action to curb volatility if necessary." He added that it was inevitable for foreign exchange rates to be impacted by the result of the election, regardless of who became president.

Heightened trade protectionism following the U.S. presidential election would be a potential downside risk to the recovery of the global economy, Choi said.

Trump's administration is believed to heighten trade protectionism, which would negatively impact major exporters in South Korea such as Hyundai Motor Co and Samsung Electronics Co Ltd. Shares in both companies fell on Wednesday, along with many others in South Korea's main bourse.

Yoo, however, said that Trump's campaign pledges may not actually end up as policy.

In a separate statement, the nation's trade ministry said it will find ways to respond to any possible trade policy changes in the U.S. that may include tightened restrictions for imports there.

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