The Bank of Korea pledged steps to stabilize markets if needed as it sought to ease anxiety over the closures of Silicon Valley Bank and Signature Bank.
(Bloomberg) — The Bank of Korea pledged steps to stabilize markets if needed as it sought to ease anxiety over the closures of Silicon Valley Bank and Signature Bank.
While playing down the potential for the shutdowns to spark a systemic risk for the banking sector, the BOK said Monday in a statement that it will closely monitor any fallout for market rates, equities and the won.
The BOK is among the first Asian central banks to commit to taking action if needed in efforts to cushion the fallout from the SVB collapse. On Sunday, South Korea’s Finance Minister Choo Kyung-ho also met with top financial policymakers to discuss the issue and said the nation would watch for signs of impact.
The SVB collapse adds to risks for the Korean economy as it comes under strain from higher interest rates and slumping exports. The BOK has raised its key rate by 3 percentage points since August 2021 to fight inflationary pressure.
Korean exports for the first 10 days of March fell 16.2% with a trade deficit of $5 billion, the customs office said Monday. Excluding distortions from working-day differences, daily average exports fell 27.4%. That fall points to a further deterioration in global demand, though the data backing that up is limited.
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