Seoul vows steps to deter won appreciation
A high-ranking official from the Ministry of Strategy and Finance says the strengthening of the won could potentially derail the Korean economy from its path to recovery.
Speaking on condition of anonymity, he said last Wednesday's intervention in the foreign exchange market reflects the government's determination to stabilize the Korean currency.
On Wednesday, when the won hit a five-year high of 1,54 won against the dollar during intra-day trading, officials from both the Bank of Korea and the Ministry of Strategy and Finance verbally intervened in the market, to push the won lower to close above the psychologically important 1,60 level.
Foreign investors have recently snapped up Korean stocks and bonds which they see as a safe bet promising a relatively high returnthereby pushing up the Korean currency.
In the three months to September, the Korean won rose by 6.3 percent,…the second highest margin of increase among currencies of all the G20 countries.
Both Finance Minister Hyun Oh-seok and Bank of Korea Governor Kim Choong-soo last week, reaffirming that the government will slow down the pace of the won's appreciation, said measures being considered include taxing foreigners investing in local bonds and requiring hedging against currency fluctuations.
But many experts say such government steps may not be enough to stabilize the won, given the foreign appetite for Korean stocks and global economic uncertainties, including the timing of the planned tapering of U.S. stimulus program.
Connie Kim, Arirang News.
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