SEOUL, June 24 (Xinhua) -- South Korea's financial markets fell into panic on Friday as Britain became the first country to leave the European Union (EU), but the country's financial regulator forecast that negative effects on the economy would be short-lived in consideration of solid fundamentals.
The South Korean currency finished at 1,179.9 won versus the U.S. dollar, down 29.7 won from the previous close. The daily volatility between inter-day high and low of 33.2 won was the highest since Sept. 23, 2011 when the European fiscal crisis rattled global markets.
The foreign exchange market fluctuated sharply as the initial voting results on the British referendum moved between Leave and Remain, but the currency turned downward and extended losses as the British vote to leave the EU became a foregone conclusion.
According to the final result of the referendum, 51.89 percent voted for Leave, while 48.11 percent voted against it. The UK would become the first member to leave the 28-nation union. The country became an EU member in 1973.
The British pound and the European single currency plunged to the dollar, but the Japanese yen, considered as safe haven currency, advanced versus the greenback. The won/yen exchange rate closed at 1,152.58 won per 100 yen, up 62.75 won from the previous close.
The local stock market faced Black Friday as the Brexit was unexpectedly materialized. The benchmark KOSPI tumbled 3.09 percent, or 61.47 points, to close at 1,925.24, marking the fastest fall in about four years.
Foreigners dumped the KOSPI200 index futures worth 1.13 trillion won (960 million U.S. dollars), while selling a net 148 billion won worth of stocks on spot.
The KOSPI200 Volatility Index, called a fear index as it gauges market fears, jumped to 26.67 in the trading, posting the highest in 2016.
The tech-savvy KOSDAQ index plunged 4.76 percent, the highest daily decline since September 2008. The market's trading was halted earlier trading as the sidecar alert was issued due to an excessive plunge.
South Korea's financial regulator expected financial markets at home and abroad to be affected by the Brexit in the short term, but it forecast the negative effects could be short-lived thanks to robust fundamentals and external soundness.
Financial Services Commission (FSC) Chairman Yim Jong-Yong held an emergency meeting to discuss countermeasures on the Brexit, deciding to operate a 24-hour monitoring system in preparations for possible short-term fluctuations in the global market.
The FSC said in a statement that the economy would sufficiently tackle an expanded fluctuation in the global financial market thanks to solid economic fundamentals and robust external soundness, urging market players to refrain from over-reacting to temporary market volatility.
The ratio of South Korea's short-term foreign debts to total external liabilities continued to fall from 43.1 percent in 2009 to 27.4 percent in 2015. The percentage of current account surplus to gross domestic product (GDP) increased from 3.7 percent to 7.7 percent in the cited period.
Vice Finance Minister Choi Sang-Mok said at an emergency meeting with his counterparts from the Bank of Korea (BOK), the FSC and the Financial Supervisory Service (FSS) that negative effects in the global financial market would be inevitable for the time being.
Choi, however, noted that his country's current account surplus, foreign exchange reserves, external soundness and fiscal stimulus room stayed at one of the highest levels in the world, vowing to make all-out efforts to stabilize markets with all available tools.
The vice minister added that Group of Seven (G7) and the European Central Bank (ECB) would take measures to stabilize markets, saying that South Korea will make market-stabilizing efforts in cooperation with China and Japan.
Some of market experts also forecast the negative effects from the Brexit to be short-lived. The Hyundai Research Institute (HRI) said that global financial markets would fluctuate in the short-term and business activities would be negatively affected by the financial turmoil.
The HRI, however, expected the effects to continue two to three days or as long as one week, noting that emerging economies, including South Korea's would not face big challenges from the Brexit.
