Officials at the Bank of Korea and the Ministry of Strategy and Finance once again expressed concerns over the Korean won’s appreciation, indicating their intentions to control the won’s strength against the dollar despite cautions from their U.S. counterparts.
The exchange rate rose 1.5 won against the dollar to 1,057.9 won on Wednesday as forex officials indicated that it would not rule out additional market intervention to tame the won’s rise.
The won has been gaining as foreign investors reallocate their funds invested in emerging markets to Asia’s fourth-largest economy with sound fundamentals.
The capital inflow has led to a weaker dollar as foreigners have been cashing in their greenbacks for the Korean won with the possibility of the rate further sliding to below this year’s record low of 1,054.3 won.
Forex officials reportedly intervened on Tuesday by selling dollars in a bid to prevent the exchange rate from falling back to that low when the local currency was appreciating toward 1,054.8 won during trading.
Korea remained adamant about slowing the won’s strength as forex officials saw that their market intervention in October had not been effective. Bank of Korea Gov. Kim Choong-soo said that the Korean exchange market has been moving separately from other markets.
“Korea has been deviating from (the level of currency fluctuations seen in) other markets,” Kim said in an economic-related meeting on Wednesday.
He noted that Australia, India and Indonesia saw the value of their currencies drop 15 percent on average between May and September this year when the U.S. Federal Reserve assured global economies that it would maintain its monetary stimulus.
The Finance Ministry has disregarded calls by its counterpart, the U.S. Department of Treasury, for Korea to abide by the international norm of a market-determined rate and reduce its reliance on exports for growth.
The Finance Ministry told the press that it would “go its own way” in managing the foreign exchange, while the Bank of Korea called the Treasury’s claims “inappropriate,” saying that Korea’s current account surpluses were not due to a weak won.
By Park Hyong-ki (
hkp@heraldcorp.com)
