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BOK net sells $3.8 bln in market stabilization efforts in H1

All News 16:43 September 30, 2019

By Byun Duk-kun

SEOUL, Sept. 30 (Yonhap) -- South Korea's central bank said Monday that it net sold US$3.8 billion in the first six months of the year to smooth out volatility on the local foreign currency market.

The amount marks a sharp increase from net selling of $187 million during the second half of 2018.

It marked the second time the BOK released such information as part of efforts to boost its transparency for potential currency market intervention, but the central bank did not disclose any other details.

The South Korean central bank denies any market intervention, insisting its efforts are limited to "smoothing operations."

BOK net sells $3.8 bln in market stabilization efforts in H1 - 1

The net selling apparently came in the face of a steady decline in the value of the local currency to the U.S. dollar.

The South Korean won closed at 1,154.7 won against the greenback at the end of June, down 35.7 won from 1,119.0 won per dollar at the start of the year, becoming one of the worst performers among Asia's currencies.

The BOK is widely expected to have continued net selling in the third quarter, with the won once slipping to a more than three-year low of 1,222.20 won per dollar in August. The Korean won closed at 1,196.20 won against the greenback on Monday.

Meanwhile, the BOK said it will begin releasing quarterly figures from December when its market stabilization efforts in the third quarter will be released.

The won's weakness came amid concerns that Asia's fourth-largest economy is losing its growth momentum in the face of a decline in chip prices and the escalating trade tension between the United States and China, the country's top two trading partners.

The Korean economy grew 1 percent on-quarter in the second quarter, rebounding from an unexpected retreat of 0.4 percent in the previous quarter. The economy, however, is widely expected to miss its annual growth target of 2.2 percent, set by the central bank, for the year on still unfavorable external conditions.

The central bank is also expected to trim its policy rate further next month after cutting it by a quarter percentage point to 1.5 percent in July amid heightened downside risks.


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