South Korean finance minister vows swift response to FX volatility
A South Korea won note is seen in this illustration photo May 31, 2017. REUTERS/Thomas White/Illustration
SEOUL, Jan 14 : South Korea will take steps to rein in increasing volatility in the foreign exchange market and find ways to resolve an imbalance in dollar demand and supply, the finance minister said on Wednesday.
The won cut early losses to trade up 0.3 per cent at 1,475.0 versus the dollar, set to snap 10 straight sessions of losses, off an earlier level of 1,479.2 that was its weakest since December 24.
"Recently, despite record-high current account surpluses, volatility is increasing in the foreign exchange market with one-sided trading," Finance Minister Koo Yun-Cheol said in remarks prepared for a policy discussion forum.
It was desirable to introduce policy measures to counter "excessively pessimistic" market sentiment, Kwon Yong-o, head of the Bank of Korea's international finance research team, told the forum.
The won's current position in the upper 1,400 range did not align with economic fundamentals, he added.
The authorities attributed the recent imbalance in dollar demand and supply to rapidly expanding overseas securities investments.
Koo said the government planned to speed discussions about the national pension fund's impact on the currency market, as well as policy changes, to win an upgrade to developed-market status.
Authorities aim to hammer out specific measures to balance the fund's investment returns and foreign exchange stability within the year, added Kim Jae-hwan, a director general at the finance ministry.
The Bank of Korea is expected to keep interest rates unchanged on Thursday, as the won's fall has limited room for easing, a Reuters poll showed.
