South Korea will step up market monitoring and remain ready to take necessary action to minimize the impact of the recent U.S. move to ease its economic stimulus efforts, the country's top economic policymaker said Wednesday.

"Since the Fed's decision to reduce its quantitative easing was announced, financial markets not just in emerging countries but also in advanced nations are showing signs of instability," Finance Minister Hyun Oh-seok said at a meeting with other economy-related ministries in Seoul.

"We expect that the tapering will get underway in full swing going forward," he said. "The government will step up its market monitoring and react quickly to prevent any changes in external situations from impacting our economy."

Last week, the U.S. Federal Reserve decided again to cut its monthly bond purchase program -- put into place to stimulate the economy by injecting liquidity into the market -- by $10 billion to $65 billion in February. The Fed had already reduced bond purchases from $85 billion to $75 billion in January.

Global financial markets showed signs of instability on concerns that the tapering could prompt a massive capital outflow from fragile emerging economies.

South Korea's stock market, closed for two days due to the Lunar New Year holiday, tumbled when it opened this week, with the benchmark KOSPI falling 1.09 percent on Monday and another 1.72 percent on Tuesday.

Hyun still cautioned against a knee-jerk reaction to changing market developments, saying that the government will work hard to differentiate its economy from other countries by focusing on strengthening its fundamentals in the longer term.

He said the government will continue to bolster domestic demand in order to attain a balanced growth, indicating that it will push to reduce its heavy dependence on exports for economic growth by stimulating private-sector consumption and corporate investment. (Yonhap News)