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South Korea will "flexibly" manage its capital controls: finance minister
[SEOUL] The South Korean government is strengthening its monitoring of all financial markets in case global volatility rises, and it will actively respond to stabilise domestic ones if needed, the country's finance minister said on Thursday.
This includes managing existing capital controls in a "flexible" manner, said Finance Minister Choi Kyung-hwan in a speech opening a treasury bond conference in Seoul.
He gave assurances here was no need to worry about capital flight from South Korea although there has been a slight decrease in inflows from offshore this year to buy Korean treasury bonds. But central banks in major economies have been steadily buying them, he added. "We have seen foreign flows to treasury bonds decline a bit this year, but it is not a situation where we must worry over capital flight as we are seeing steady flows from major central banks and global funds," Mr Choi said.
The finance minister pointed out there was a chance external risks to the local economy could expand or become prolonged due to the pending rate hike by the US Federal Reserve and China's decision to devaluate the yuan as well as that country's economic slowdown.
South Korean stocks and bonds in July saw their biggest monthly outflow in four years, data from the country's financial regulator showed earlier this month.