Go to Contents Go to Navigation

(2nd LD) S. Korea vows market stabilizing steps amid won's high volatility

All News 16:16 June 13, 2022

(ATTN: UPDATES throughout with details; ADDS photo)

SEOUL, June 13 (Yonhap) -- South Korea said Monday it plans to take measures to stabilize the foreign exchange market, if needed, as the Korean currency showed high volatility amid heightened global inflation risks.

The remarks are widely seen as the latest verbal intervention to curb the won's weakness that has accelerated in recent months due to the prospect of the Federal Reserve's aggressive rate hikes.

The government and the Bank of Korea (BOK) will closely monitor the won's excessive volatility with a sense of special alertness, according to First Vice Finance Minister Bang Ki-sun.

"FX authorities will make efforts to prevent excessive one-side movements by the won amid sensitive market reactions," he said at an emergency meeting on macroeconomic conditions.

The government also said it plans to buy back more Treasury bonds this week in an effort to tackle a sharp hike in bond yields.

Screens at a Hana Bank dealing room in Seoul show the trading values of the KOSPI main stock price index and the Korean currency on June 13, 2022. (Yonhap)

Screens at a Hana Bank dealing room in Seoul show the trading values of the KOSPI main stock price index and the Korean currency on June 13, 2022. (Yonhap)

South Korea's stocks and currency tumbled Monday on concerns that higher-than-expected U.S. inflation could accelerate the Fed's monetary tightening.

After the verbal warning, the Korean currency pared its earlier slide after it fell as much as 20 won to hit an intraday low of 1,288.90 won against the U.S. dollar.

The Korean currency ended at 1,284 won per greenback, down 15.1 won from the previous session. The won has fallen 7.4 percent against the dollar so far this year.

The benchmark stock price index tumbled 91.36 points, or 3.52 percent, to hit a yearly low of 2,504.51 points. Foreigners dumped a net 495.3 billion won (US$385.4 million) worth of local stocks.

Heightened global inflation risks raised market volatility on concerns that major central banks' aggressive rate hikes could dampen global economic growth.

In May, U.S. consumer prices jumped 8.6 percent on-year, the fastest gain in 41 years. The European Central Bank hinted at its first rate hikes in 11 years in the coming months.

The Fed is scheduled to hold its policy meeting on Tuesday and Wednesday, when a 0.5 percentage-point "big step" hike is widely expected.

South Korea's foreign exchange authorities unloaded a net $6.89 billion in the fourth quarter of last year to ease volatility in the foreign exchange market.

The BOK and the finance ministry have disclosed quarterly figures on net selling or buying of dollars in the foreign exchange market since the third quarter of 2019.


Send Feedback
How can we improve?
Thanks for your feedback!