The reports surrounding the US Federal Reserve’s plan to trim bond purchases over an extended period have had limited impact on the Korean market “for now,” First Vice Finance Minister Lee Eog-won said Tuesday.

The remark follows some volatility observed in the nation’s main bourse in the events leading up to and after US Fed Chairman Jerome Powell’s speech at the Fed’s annual Jackson Hole gathering last week. The central bank may begin withdrawing some of its easy-money policies before the end of the year, though interest rate hikes are still off in the distance, he indicated.

Lee said that though Powell mentioned tapering of bond purchases by the end of the year, the timeline remains well within market expectations and took a dovish stance against the possibility of rate hikes or early tapering. The global finance market showed signs of stock market gains, drop in interest rates and a weakened dollar trend, Lee explained.

But he added that the volatility could grow with the US Labor Department’s August jobs report scheduled to be released later this week and as the tapering timeline becomes more specific. The August data would reflect the spread of the Delta variant ramped up there over the summer.

South Korean stocks opened lower Tuesday on dampened sentiment over the country’s ongoing struggle against the fourth wave of the COVID virus, which has been putting daily cases above 1,000 since early July. The benchmark Kospi fell 4.03 points, or 0.13 percent, to trade at 3,140.16 points in the first 15 minutes of trading.

It had however, gained for a second consecutive session as of Monday’s closing, with the investors taking a relaxed stance on Powell’s remarks.

Lee said the key task for the government would be acting out at the right timing in countering financial imbalances from excessive liquidity, snowballing debt and spiking asset prices.

On the local economy, Lee downplayed the impact of the fourth wave of the coronavirus, saying that its effects were somewhat similar to the pandemic before the country’s fight against its worst wave. However, as uncertainties continue to exist, it is crucial to adopt strict quarantine measures and support recovery of pandemic woes at the moment, he added.

By Jung Min-kyung (mkjung@heraldcorp.com)