After the exchange rate of the won fell to the level of 1,400 won per dollar for the first time since the end of 2022, the South Korean authorities issued a rare warning to foreign exchange market participants.
Zhitong Finance learned that after the Korean won exchange rate fell to the level of 1,400 won per dollar for the first time since the end of 2022, the South Korean authorities issued a rare warning to foreign exchange market participants. Shin Joong-beom, director of the International Finance Bureau of the Ministry of Finance of South Korea, and Oh ?$#@$-hwa, head of the international department of the Bank of Korea, jointly sent a text message saying, “The foreign exchange authorities are paying close attention to factors such as exchange rate trends and supply and demand dynamics in the foreign exchange market with a particularly vigilant attitude. Excessive one-sided fluctuations in the foreign exchange market are not desirable for the Korean economy.”
The last time the Ministry of Finance and the Bank of Korea issued a joint statement on the won issue was in June 2022. Before the Bank of Korea and the Ministry of Finance issued this warning, the USD/KRW exchange rate rose to the much-anticipated 1,400 mark for the first time since November 2022.
Like other Asian currencies, the won is also facing fresh pressure, and the dollar continues to strengthen as investors postpone their bets on the Federal Reserve's interest rate cuts. Other emerging market governments are also increasing their support for the local currency. The Bank of Indonesia backed the Indonesian rupiah, which fell below the level of IDR 16,000 per US dollar for the first time in 4 years.
The exchange rate of the US dollar against the Korean won settled at 1394.65 due to verbal intervention by the South Korean government. Since this year, the won has fallen 7.6% against the US dollar, making it the worst performing currency in Asia after the yen. The won exchange rate is still above the 13-year low of 1444.5 won per dollar set in October 2022.
According to reports, South Korea will regularly intervene in the market when exchange rate fluctuations are large to mitigate exchange rate fluctuations. After buying won for 9 consecutive quarters, the South Korean authorities were net buyers of the US dollar in the fourth quarter of last year to contain the pace of the dollar's decline.