BOK warns of prolonged market volatility amid Trump tariff scheme

IANS April 7, 2025 182 views

The Bank of Korea has raised significant concerns about prolonged market instability triggered by the Trump administration's aggressive tariff policies. South Korean financial markets are experiencing substantial turbulence, with the stock index plummeting and currency value dropping to a 16-year low. Economic think tanks like KDI are highlighting mounting downward pressure on the nation's economic prospects. These developments suggest potential long-term challenges for South Korea's economic resilience in the face of escalating international trade tensions.

"Uncertainties surrounding the U.S.' path regarding its tariff policies remain high" - Ryoo Sang-dai, BOK Deputy Governor
Seoul, April 7: The South Korean market could face heightened volatility for a longer-than-expected period due to the Donald Trump administration's sweeping tariff policy, the central bank said on Monday, calling for prompt implementation of market stabilisation measures when necessary.

Key Points

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BOK warns of extended market volatility due to Trump tariffs

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KOSPI index drops over 4% on trade uncertainty

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Korean won hits 16-year low against US dollar

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Economic risks mounting for South Korean economy

Bank of Korea (BOK) Deputy Gov. Ryoo Sang-dai made the assessment during an emergency task force meeting meant to review market conditions after Trump's tariff measures have affected the stock and foreign exchange markets at home and abroad, reports Yonhap news agency.

"Uncertainties surrounding the U.S.' path regarding its tariff policies remain high and such a situation may be prolonged longer than expected. It is essential to closely monitor the financial and foreign exchange markets through a 24-hour surveillance system and promptly implement market stabilisation measures when necessary," Ryoo said.

Trump vowed to impose "reciprocal" tariffs on imports from most of the world, including 25 percent duties on South Korean goods, which are set to take effect on Wednesday (U.S. time). He also implemented a 10 percent "baseline" tariff on foreign imports starting Saturday.

Ryoo and other officials said the recent tariff scheme was "strong," and the move is feared to spark a global trade dispute, according to the BOK.

Trump's tariff policy battered the local stock market Monday, with the benchmark Korea Composite Stock Price Index (KOSPI) sinking more than 4 percent as of 11:30 a.m.

The South Korean currency also traded markedly lower against the U.S. dollar, nearing the 1,470 won mark, a level unseen in about 16 years since 2009.

South Korea's economy is facing "mounting" downside risks due to sluggish production and heightened trade uncertainties sparked by U.S. tariffs, a state-run economic think tank said on Monday.

"Recently, the Korean economy is facing mounting downward pressure as weakened growth in domestic and external demand has weighed on production and U.S. tariff hikes have exacerbated global trade uncertainties," the Korea Development Institute (KDI) said in its monthly economic assessment report.

The KDI has now noted downside risks for Asia's fourth-largest economy for the fourth consecutive month.

While equipment investment remains on a solid trajectory, continued sluggishness in construction investment and weak consumption growth are limiting the pace of domestic demand recovery, the KDI said.

—IANS

Reader Comments

J
James K.
This is exactly why we need stronger trade partnerships with other Asian economies. Relying too much on US trade policies leaves us vulnerable. Hope our government has a solid Plan B! 🤞
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Soo-min L.
My small export business is already feeling the pinch. These tariffs couldn't have come at a worse time. The BOK needs to act fast before more jobs are lost.
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Min-ji P.
While I understand the concern, I think the article could have provided more concrete examples of how this will affect everyday consumers. Prices are already high enough as it is!
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David H.
Trump's trade policies are like a wrecking ball to global markets. The KOSPI drop is terrifying - my retirement fund took a huge hit today. 😰
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Eun-ji K.
Interesting analysis, but I wish there was more discussion about how this compares to previous trade disputes. Is this really worse than what we faced during the 2008 crisis?
T
Tae-yang R.
The won dropping to 1,470 against the dollar is brutal for students studying abroad. My tuition payments just got 10% more expensive overnight...

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Tags:
Trump Tariffs South Korea Economy Bank of Korea Global Trade Market Volatility Donald Trump Ryoo Sang-dai
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