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KRW weakening vs USD eases as authorities ratchet up verbal intervention

Collected: 2022.04.29

Distributed: 2022.04.30

Source: Go Direct

First Vice Minister of Economy and Finance Lee Eog-weon [Source: Yonhap]

The U.S. dollar’s climb to new thresholds versus the Korean won slightly eased Friday after Seoul authorities repeated warnings of intervention to curb “excessive” bias.

The dollar came down to 1,267,00 won as of 1:40 p.m. from 1,272.5 closing, the highest since March 19, 2020, just a day after a jump to 1,260 won threshold.

The won has been weakening to the levels of the onset of Covid-19 outbreaks as the Korean markets bear rapid ebb of foreign capital amid favor of U.S. dollar assets ahead of leaps in U.S. interest rates.

“The government will closely monitor the foreign exchange market to take necessary stabilization measures if the market is too heavily tilted,” said First Vice Minister of Economy and Finance Lee Eog-weon on Friday.

He echoed the interventionist comment from Finance Minister Hong Nam-ki a day earlier who has vowed stabilization actions.

Lee predicted the volatility in the Korean financial markets to continue for some time until the market is clearer of the scope and speed of the U.S. interest rates hikes.

He argued foreign capital flight would be temporary and restricted as the country’s fundamentals remain solid.

The government will keep close watch on the ramifications on global markets from the possibility of Russian default, he added.

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