The South Korean won experienced a sharp gain against the dollar in early trading Friday, following a verbal intervention by the local foreign exchange authorities.
The won was quoted at 1,458.38 per dollar as of 11 a.m. Friday, gaining nearly 8 won from the close of after-hours trading.
The won began trading at 1,471.9 per dollar and further depreciated to 1,474.9, pressured by US-driven risk-off sentiment and foreign investors’ net selling in the local stock market. However, following the verbal intervention by the authorities, the won gained value and even strengthened to 1,455.78 per dollar.
Finance Minister Koo Yun-cheol held a market monitoring meeting with Bank of Korea Governor Rhee Chang-yong, Financial Services Commission Vice Chairman Lee Eok-won and Financial Supervisory Service Governor Lee Chan-jin.
“The participants expressed concern that uncertainty in the foreign exchange market has been growing, with the won–dollar rate even exceeding the 1,470 level due to Korean residents’ increasing overseas investments,” according to a statement released after the meeting.
“They agreed that if forex supply-demand imbalances caused by outbound investment persist, expectations for a weaker won could become entrenched among market participants, which could have a significant impact on the currency. They shared the view that it is necessary to respond by actively utilizing all available policy tools.”
The participants also agreed to work closely with major players impacting the forex market, including the National Pension Service and exporters, to devise measures to stabilize the exchange rate, the statement continued.
In recent weeks, the local currency has depreciated against the dollar, driven by the market's increasing demand for the greenback.
Earlier this week, the won had briefly strengthened when Rhee hinted at intervention in a media interview, saying the forex market is “excessively sensitive” to uncertainties and that the authorities are willing to intervene in case of “excessive movement.”
silverstar@heraldcorp.com
