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South Korea in Talks with Japan, Allies Over Currency Volatility
Summary
A top South Korean finance official stated the country is in close communication with Japan and other allies regarding foreign exchange issues. The announcement comes as the South Korean won continues to trade near a 17-year low against the U.S. dollar.
South Korea's vice finance minister, Huh Chang, announced on Thursday that Seoul is in close communication with Japan and other key allies concerning foreign exchange markets. During a news conference, Huh, who oversees forex matters, warned that the South Korean won is "currently misaligned compared to the economy’s fundamentals."
The statement comes as the won has weakened significantly, trading near a 17-year low against the U.S. dollar and having fallen 7.4% this year. This currency slump contrasts with the country's benchmark KOSPI stock index, which has surged. The situation mirrors that of Japan, where the yen is also hovering near multi-decade lows against the dollar.
When asked about potential joint policies with Tokyo, Huh did not elaborate on specific interventions but affirmed the government is prepared to deploy stabilization measures. He noted this readiness is particularly relevant ahead of a planned shift to a 24-hour dollar-won trading cycle, intended to counter excessive price swings from potential illiquidity.
AdAnother official at the news conference, Deputy Finance Minister Moon Ji-sung, confirmed that communication channels with both Tokyo and Washington on forex matters are being maintained. Moon also expressed expectations that the extended onshore trading hours will attract trading volume from the offshore non-deliverable forward (NDF) market, stating the government is reviewing measures to encourage this shift.