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Gov't verbally intervenes to stabilize markets amid Iran war tensions, U.S. rate freeze

Published: 19 Mar. 2026, 13:03

LIM JEONG-WON
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Finance Minister Koo Yun-cheol speaks during a meeting on macroeconomic and financial issues at the Korean Federation of Banks building in Jung District, central Seoul, on March 19. [YONHAP]

The government verbally intervened to stabilize Korea's financial markets on Thursday amid escalating tensions in the Middle East and a rate freeze by the U.S. Federal Reserve in Washington on Wednesday.

The government will use all available resources to stabilize financial markets, Finance Minister Koo Yun-cheol said at a meeting on macroeconomic and financial issues in Jung District, central Seoul. The meeting was held in response to market volatility that spiked as critical energy facilities in the Middle East were attacked during the ongoing Iran war, while the Fed decided to keep its interest rates unchanged, according to the Ministry of Finance and Economy.

The ministry said finance authorities agreed to continue round-the-clock monitoring of financial and foreign exchange markets, and take market stabilization measures, if needed, as uncertainties surrounding the Middle East persist.

"We will closely track forex market conditions and take timely action if the movement of the Korean won deviates excessively from its underlying fundamentals," Koo said.

"Compared to the beginning of this year, the growth rate of the stock market remains higher than that of major countries, and corporate bond credit spreads are stable," Koo said regarding the stock market and its sharp fluctuations. "The government, the Bank of Korea [BOK], the Financial Supervisory Service and other relevant agencies will spare no effort in stabilizing the market while keeping even the worst-case scenarios in mind, and will also accelerate efforts to strengthen fundamentals."

Koo explained that the government is pursuing improvements to the fundamental structure of the capital market while avoiding stock price manipulation.

"We will finalize detailed criteria to prohibit duplicate listings in principle, following consultations in the second quarter of this year, and we will proceed without delay with the reorganization of regulations to separate the Kosdaq," Koo said, referring to the government's plan to separate the secondary bourse market into two tiers — one for mature innovative companies and the other for growing companies.

Government and financial authorities are seen during a meeting on macroeconomic and financial issues at the Korean Federation of Banks building in Jung District, central Seoul, on March 19. From left, Financial Supervisory Service Gov. Lee Chan-jin, Finance Minister Koo Yun-cheol, Bank of Korea Gov. Rhee Chang-yong and Financial Services Commission Vice Chairman Kwon Dae-young. [NEWS1]

In the bond market, the government and the BOK will closely work together to implement market stabilization measures in a timely manner, including emergency buybacks and purchases of government bonds, when necessary, he added.

To prepare for worst-case scenarios, financial authorities agreed to conduct stress tests across the entire financial sector to assess Korean markets' crisis response capabilities, while making pre-emptive preparations to expand the market stabilization program comprising at least 100 trillion won ($66.6 billion) in support.

Regarding the latest U.S. rate freeze, authorities said it was an expected outcome, but uncertainties surrounding the largest global economy's monetary policy direction still remain due to inflation concerns sparked by surging oil prices and supply chain disruptions caused by the Iran crisis, according to the ministry.

BOK Gov. Rhee Chang-yong, Financial Supervisory Service Gov. Lee Chan-jin, and Financial Services Commission Vice Chairman Kwon Dae-young attended the meeting.

BY LIM JEONG-WON, YONHAP [[email protected]]