[Courtesy of Bank of Korea]
South Korea’s won slid further to a 68-month low Friday though the government and central bank intervened to stop the won’s relentless fall against the dollar amid concern capital outflow will increase in Asia’s fourth-largest economy.
The won briefly recouped nearly all its earlier steep losses against the dollar after the finance ministry and the Bank of Korea issued a joint statement nearing the mid-session that they would take “all measures necessary against excessive movements in dollar-won trading.”
But the won ended local trade down 0.6 per cent at 1,234.4, after declining as much as 1 percent against the dollar, touching a low of 12,39.6 won per dollar. For the week, the won lost 1.9 percent, its sharpest weekly percentage loss since Jan4-8 period.
"The Bank of Korea and the government feel that recent movements in the dollar-won exchange rate have been excessive and are concerned that herd behaviour in the market has been intensifying," the statement said.
"Our foreign exchange officials' stance that they will take measures against excessive movements has not changed and we will do all that is needed if necessary."
Currency traders said the statement was followed by a suspected strong market intervention by foreign exchange authorities to support the won.
Finance minister Yoo Il-ho said Thursday the latest movements in the dollar-won exchange rate warrant close observation by the government and officials are ready to step in if movements become too exaggerated.
He also said recent outflows in local stocks and bonds are not showing a "decided trend".
South Korea's won fell to the lowest levels in more than five years this week as authorities failed to dispel market fears that the central bank will soon lower benchmark interest rates further to boost a weak economy.
The Bank of Korea kept its benchmark interest rate at a record low of 1.5 percent Tuesday, but many analysts expect a rate cut as early as next month though Bank of Korea governor Lee Ju-yeol did not signal any immediate moves.
The won’s slide was also triggered by the depreciation of the Chinese yuan and the increased tension between North and South Korea over Pyongyang’s rocket launch and the shutdown of a jointly-run industrial park near the border.
Analysts forecast the won will continue to depreciate for a while as investors turn their eyes to safer assets and foreigners pull money out of the volatile Korean market.
By Alex Lee
reporter
Park Sae-jin
swatchsjp@ajunews.com
![[Weekly Stock Market] Investors to focus on BOKs interest rate decision](https://image.ajunews.com/content/image/2023/02/19/20230219023158359153.jpg)