Story
South Korean Official Warns Won is 'Misaligned,' Confirms Talks with Japan
Summary
A top South Korean finance official stated the won is misaligned with economic fundamentals and confirmed that Seoul is in close communication with Japan and other allies on foreign exchange issues. The warning comes as the South Korean won languishes near a 17-year low against the U.S. dollar.
South Korea's Vice Finance Minister Huh Chang said on Thursday that the government is in close communication with Japan and other key allies regarding foreign exchange matters. Speaking at a news conference in Seoul, Huh, who is in charge of forex policy, warned that the South Korean won is currently "significantly misaligned" with the country's economic fundamentals.
The comments come as the won trades near a 17-year low against the U.S. dollar, having fallen 7.4% against the currency this year. The situation mirrors that of Japan, where the yen is hovering near a four-decade low, prompting reports that Japanese officials are considering more aggressive tactics to support their currency.
Huh's statements were made just days before South Korea is scheduled to extend its onshore dollar-won trading to a 24-hour cycle. He noted that the government is prepared to implement stabilization measures if the market experiences excessive volatility or illiquidity following the change. However, he did not elaborate on specific potential interventions.
AdAlso present at the news conference, Deputy Finance Minister Moon Ji-sung confirmed that Seoul maintains communication channels with both Tokyo and Washington on currency issues. Moon added that officials expect the extended trading hours to shift trading volume from the offshore non-deliverable forward (NDF) market to the domestic spot market, and that the government is reviewing measures to encourage this shift.