Seoul Vows to Stabilize Won, Warns Against One-Sided Moves
SEOUL – South Korean authorities are closely monitoring foreign exchange volatility and stand ready to take “bold market-stabilisation measures” if the won experiences excessive, one-sided movements, officials said today. The comments follow a briefing that economists deemed insufficient to quell market concerns.
The won was retracing after briefly falling below 1,460 per dollar earlier in the session, according to NH Futures economist Wee Jaehyeon, who stated the briefing “fell short of market expectations for concrete foreign-exchange stabilisation measures involving the National Pension Service (NPS).”
Finance Minister Kim Joo-young and other officials outlined a new framework intended to balance the NPS’s investment returns with foreign-exchange market stability,but provided few details.Koo sung-mo, a senior official at the Ministry of Economy and Finance, clarified the framework isn’t aimed at directly defending the won, but at establishing a “long-term, essential option.”
The government had previously pledged in November to “use all available tools” to support the won, coordinating with the NPS. Discussions have included balancing pension fund returns with market stability and consultations with stock brokerages.
Kim Jae Hwan, director-general of the International Finance Bureau, echoed the minister’s commitment to intervene if necessary.
The NPS,Korea’s largest institutional investor with approximately US$530 billion in foreign assets,has historically played a role in stabilizing the won through hedging and foreign exchange operations,including selling dollars and buying the won from January to May this year.
The Bank of Korea (BOK) is expected to hold its benchmark interest rate steady at 2.5 per cent when it meets tomorrow. The weaker won has contributed to the BOK remaining on hold for the past four meetings.
While officials expect cooperation from exporters, no short-term incentives are currently under review.
