South Korea's Ministry of Economy & Finance published a readout of a foreign exchange market meeting, saying the government is maintaining full preparedness for changes in the Middle East war situation and will take appropriate measures if needed. The ministry said recent foreign exchange market moves have been driven by external uncertainty, including delays in negotiations over the Middle East war, global inflation concerns, higher government bond yields in major economies and foreign selling of Korean equities, but that volatility appears excessive relative to Korea's economic fundamentals. It is monitoring the market around the clock to prevent heightened volatility from spilling over into speculative trading. Participants from major foreign banks and securities firms said Korea's record current account surplus and earlier measures, including formal WGBI inclusion and the National Pension Service New Framework, are helping stabilize foreign exchange supply and demand. They viewed the recent increase in foreign investor sales of Korean stocks as mainly mechanical rebalancing and some profit-taking after foreign holdings rose from KRW 1,312 trillion, or 32.9 percent of the market, at the end of 2025 to KRW 2,413 trillion, or 36.8 percent, by 19 May 2026. They also said reforms have improved foreign investors' access to Korea's foreign exchange and capital markets, increased trading volumes and the number of participating institutions, and expanded use of integrated accounts. The ministry said it will continue efforts to bring Korea's foreign exchange and capital markets closer to global standards and to foster economic and financial market conditions that support larger long-term allocations by major institutional and pension investors.

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