Deputy Prime Minister and Finance Minister Lee Hyoung-il said the government will consider further reducing treasury bond issuance if necessary, while closely monitoring conditions in the market.
Lee made the remarks at a market situation review meeting held at the Bank Hall in Seoul's Jung district on the 2nd, noting that the government had decided to cut October treasury bond issuance by 5 trillion won ($3.5 billion). "We will work closely with related agencies and carry out stabilizing steps, such as emergency buybacks, depending on market conditions," he said.
The government is also watching broader bond market trends, including rising yields on corporate debt and refinancing pressure on companies with weaker credit. "Beyond treasury bonds, yields across the bond market have risen overall and credit spreads have widened this year," Lee said. "If high interest rates persist, there is a risk that refinancing burdens will grow for companies with lower credit ratings."
On the housing market, Lee pointed to price gains in some areas and the time lag before new homes are ready for occupancy as risk factors. "Outside the Gangnam area, home prices are still rising, and because there is a time lag before people actually move in, sustained policy efforts are needed before the public feels the effect of increased supply," he said.
Follow-up measures for the internationalization of the Korean won will proceed as planned. The government plans to continue building an offshore won settlement system and easing foreign exchange rules, while reviewing how the changes affect the market. It also plans to announce measures soon that would shift some capital transactions from prior notification to after-the-fact reporting and raise the threshold amounts that trigger reporting requirements.
Lee said the meeting would take a comprehensive view of the macroeconomy and the financial, foreign exchange and property markets. "We will turn this meeting into one that examines the macroeconomy and the financial, foreign exchange and property markets within a single picture," he said. "We will detect small warning signs in the market early and look at where risks arise and where they could spread."
Attending the meeting were Lee, Bank of Korea Governor Shin Hyun-song, Financial Services Commission Chairman Lee Eok-won and Financial Supervisory Service Governor Lee Chan-jin — the group known as the "F4" — along with Land, Infrastructure and Transport Minister Hong Ji-sun.
