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| A currency trader watches computer monitors at the foreign exchange dealing room in Seoul, Feb. 18, 2021. AP |
South Korea will focus on strengthening financial stability as stock market volatility has increased amid rising bond yields and concerns about inflation, the vice finance minister said Tuesday.
First Vice Finance Minister Kim Yong-beom said authorities will work to prevent ample liquidity that was created in the process of tackling the pandemic from hurting financial stability.
"Volatility in the local stock market has somewhat increased due to economic uncertainty at home and abroad, including inflation concerns and China's move to retrieve liquidity," Kim said at a government meeting on the economy.
Following a bull run, the country's key stock index has been in a tight range in recent weeks amid concerns that rising bond yields may sap demand for risky assets.
Yields on 10-year government bonds continued to break yearly highs amid rises in global bond rates and concerns about the country's planned massive debt sale.
The return on 10-year Treasurys came to 1.92 percent Monday, up from 1.71 percent at the end of last year. A hike in yields on longer-dated bonds indicates higher inflation expectations.
The country's inflation remains subdued amid the fallout of the pandemic, but prices of agricultural and oil products shot up in recent weeks.
Experts said upward inflation pressure is not high yet, but there is a possibility that market rates could trend higher amid an economic recovery.
The vice finance minister said the government will make efforts to prevent increased idle money from making its way to the property market.
"The government will focus on managing risk factors and stabilizing financial markets with extra caution," Kim said. (Yonhap)
