(ATTN: UPDATES with decline in won and stock market in paras 6-8, 10-11; ADDS photo)
By Kim Kwang-tae
SEJONG, Aug. 6 (Yonhap) -- South Korea said Tuesday it will take bold steps to stabilize its financial markets in case of increased volatility, signaling Seoul's possible intervention in the foreign exchange market.
The move came after the United States designated China as a currency manipulator in an escalating trade war between the world's two biggest economies.
South Korea said it will closely monitor the foreign exchange market amid growing uncertainty over the U.S. decision.
"We will take steps in a swift and drastic manner to stabilize financial markets under a contingency plan in case of sharp volatility," Bang Ki-sun, deputy minister of economy and finance, said in a meeting with relevant officials in Seoul.
Bang's comments suggest that South Korea could intervene in the foreign exchange market to stem the sharp decline of the local currency against the U.S. dollar.
The local currency was changing hands at 1,218.65 won with the U.S. dollar as of 9:47 a.m., down 3.35 won from the previous session's close.
On Monday, the won closed at 1,215.30 to the greenback, the lowest in over three years.
South Korea said the won declined excessively in sync with the weakness of the Chinese yuan. China let its yuan slip through its long-guarded line of 7 per dollar for the first time in 11 years, in an apparent response to Washington's escalation of their trade dispute with additional tariffs.
South Korea's financial authorities sold US$187 million in the second half of 2018 to help stabilize the market, the Bank of Korea said in March.
Also Tuesday, the benchmark Korea Composite Stock Price Index fell 31.71 points, or 1.63 percent, to 1,915.27 as of 9:47 a.m., after dipping to as low as 1,891.81 points.
One month into eased social distancing, S. Korea wrestles with cluster infections, cases with unknown routes
Virus outbreak sheds light on overlooked side of highly touted 'fast' delivery services
Moon's post-corona presidency laden with tough tasks
S. Korea shifts toward new normal of everyday quarantine but wary of 'blind spots'
Anti-Tada bill a major setback for Korea's innovation drive