Financial Supervisory Service Governor Lee Chan-jin convened an emergency financial situation inspection meeting on the 17th following the U.S. benchmark interest rate hike—the first in 3 years and 2 months—and called for thorough preparations against heightened financial market volatility.

In particular, he expressed concern that factors amplifying volatility in the domestic stock market have increased, combining the recent extension of stock trading hours due to the introduction of the Korea Exchange's after-hours market with the U.S. rate hike.

Presiding over the meeting at the main office in Yeouido, Seoul, that morning, Governor Lee noted, "There are concerns that volatility in the domestic stock market could expand due to the dispersion of trading volume following the recent extension of trading hours."

He continued, "Market volatility could grow further due to the outflow of foreign capital driven by the U.S. rate hike and the possibility of a slowdown in artificial intelligence (AI) investments," adding, "We will monitor the concentration of individual investors in high-risk products and trends in credit transactions."

The U.S. Federal Reserve raised its benchmark interest rate by 0.25 percentage points to 3.75–4.00% on the 16th (local time).

This marks the first interest rate hike in 3 years and 2 months.

The Korea Exchange has been operating the KRX after-hours market until 8:00 PM since the 14th.

From the very first day of the system's implementation, Volatility Interruption (VI) triggers were activated en masse, raising market concerns over price fluctuations.

Governor Lee stated, "As the U.S. rate hike has widespread impacts on global interest rates, capital flows, and exchange rates, we must examine the ripple effects on the domestic financial market and industry, and thoroughly prepare for increased volatility."

Regarding exchange rate volatility in particular, he instructed, "Since Japan is also showing signs of a potential benchmark rate hike, we need to prepare for changes in foreign investment capital flows driven by a stronger yen."

In addition, the FSS plans to inspect support systems to ensure smooth capital supply to mid- to low-credit-rated and non-metropolitan companies, which face difficulties in raising funds during periods of rising interest rates.

Governor Lee also emphasized the need to expand the supply of Sae HeeMang Nol-Ssi and mid-rate loans, and to vitalize debt adjustments for vulnerable borrowers such as mid- to low-credit holders.

He added, "If market liquidity shrinks, refinancing risks could emerge for securities firms and specialized credit finance companies," and stressed, "We must proactively prepare for the possibility of expanding losses by strengthening asset-liability management for insurance companies."
(Photo: Yonhap News)