South Korea’s central bank is keeping watch on market developments at home and abroad with ”utmost vigilance” and will take “timely” actions upon signs of spread in market jitters, said Bank of Korea governor Lee Ju-yeol.

His comment during a breakfast meeting with head of commercial banks on Friday comes as domestic capital markets have turned volatile in tune with elsewhere grappling with a new U.S. presidency under Donald Trump pledging ambitious fiscal stimuli and protectionist trade policy and imminent hike in U.S. interest rates that have sent up bond yields, U.S. dollar, and commodity prices.

“We had two major events that escalated uncertainties around the world this year,” he said pointing to the British vote to exit the European Union in June and the recent Trump’s victory.

“The volatility in the wake of Brexit vote was eased faster than expected, but we cannot know the direction of the reverberation from the U.S. election,” he said.

The Bank of Korea last week kept the benchmark interest rate steady for the fifth straight month at 1.25 percent, opting to save its monetary ammunitions for further upset down the road.

Anticipation of the next hike in U.S. interest rates to come as early as December heightened after Federal Reserve chair Janet Yell in a congressional testimony on Thursday said a hike would be “appropriate relatively soon.” Her comment confirming a hike move in the Dec. 14 meeting refueled the U.S. dollar that has already been on a rally streak upon expectations for aggressive infrastructure spending and higher inflation in the world’s largest economy. At 1:10 p.m. the dollar gained 5 won from previous closing to 1,181.0 won. The Korean composite stock price index retreated 0.2 percent to 1,976.00 while the secondary Kosdaq index fell 1.2 percent to 620.46 amid fears of an exodus in foreign capital.

Lee, however, advised against panic, saying the volatility from initial response from Trump’s victory was “nothing out of ordinary” and was common in markets around the world.

The Bank of Korea governor would have a bigger role to combat any upsets to the market as administrative leadership is limbo with the office of the deputy prime minister on economy strangely shared by the incumbent Yoo Il-ho and financial chief Yim Jong-yong who was nominated before the president came under legislative and civilian pressure to step down and faced criminal investigation on power abuses and other scandalous wrongdoings.

By Chung Ui-hyun

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]