The South Korean government will decide on normalizing foreign exchange regulations that it had previously eased to stem the adverse impact of the COVID-19 pandemic after monitoring trends at home and abroad.

At a meeting with officials on Tuesday, First Vice Finance Minister Lee Eog-weon cast concerns over uncertainties pervading domestic financial and currency markets amid anxieties over global inflation and the impending normalization of monetary policy by major economies. 

Lee said the government will review reverting currency-related policies previously enacted to reduce pressure and boost liquidity in its financial markets. This will be done in accordance with market trends at home and abroad, as well as the supply and demand for foreign currency.

In March 2020, regulators had raised the limit on foreign currency forward positions of local lenders from 40 to 50 percent of their equity capital and of overseas lenders from 200 to 250 percent to help boost liquidity.

The vice minister urged the country's financial watchdog to adopt a system to monitor non-bank financial institutions and conduct a trial stress test regarding their foreign exchange liquidity.