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South Korea vows swift action as Korean won weakens against greenback

ANN/THE KOREA HERALD – South Korea’s finance minister issued a warning yesterday against excessive currency volatility, pledging swift action if necessary as the Korean won continues to weaken against the US dollar.

Financial authorities will intensify efforts to stabilise the financial and foreign exchange markets, which are experiencing ongoing fluctuations due to uncertainties surrounding major policy shifts in the United States (US) after Donald Trump’s re-election to the White House.

“Given ongoing uncertainties around global economic growth, price trends, and the monetary policies of major economies – alongside potential policy changes from the new US administration – we will closely monitor market conditions with heightened vigilance, focusing on a 24-hour joint inspection system involving relevant agencies,” Finance Minister Choi Sang-mok said.

Since Trump’s victory in last week’s US presidential election, the local currency has been hovering near the psychologically significant KRW1,400 mark against the US dollar. “We must do everything possible to uphold a coordinated response system in line with the contingency plan. If volatility in financial and foreign exchange markets becomes excessive, swift and timely market stabilisation measures must be promptly implemented,” Choi said.

Choi said that the market stabilisation programmes currently in operation will be extended to the previous level in 2025, including a liquidity supply programme worth up to KRW37.6 trillion to stabilise the bond and short-term fund markets.

Despite the top economic policymaker’s verbal intervention, the Korean currency has yet to start a clear rebound, standing at 1403.6 against the greenback as of 2pm. It saw a sharp fall to 1,410 for the first time in two years on Wednesday.

The strengthening US dollar sparks concerns for inflation in Korea, which has stabilised to below the two per cent level after years of efforts.

High prices coupled with a strong US dollar will deepen concern for Korea’s central bank in weighing the timing for additional rate cuts after lowering the rate by a quarter percentage point in October to end a three-year and two-month rate freeze.

A banker checks US dollar bills at KEB Hana Bank in Seoul, South Korea. PHOTO: THE KOREA HERALD
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