Government: "Concerns Over Foreign Exchange Market Concentration... Stabilization Measures If Speculative Movements Confirmed"

Bang Gi-seon, Vice Minister of Strategy and Finance, is presiding over the Macroeconomic and Financial Meeting held on the 26th at the Bankers' Hall in Jung-gu, Seoul, and delivering opening remarks. (Photo by Ministry of Strategy and Finance)

The government recently emphasized that as pressure on the won-dollar exchange rate rises, excessive market concentration could expand, and if speculative movements are detected, timely market stabilization measures will be taken.

Bang Ki-seon, First Vice Minister of Strategy and Finance, made these remarks during a macroeconomic and financial meeting held at the Seoul Banking Hall with the Bank of Korea, Financial Services Commission, Financial Supervisory Service, and the International Finance Center.

The won-dollar exchange rate recently showed instability by surpassing 1,340 won per dollar for the first time in 13 years and 4 months. Although it fell back to the 1,335 won range after the Bank of Korea raised the base interest rate by 0.25 percentage points the previous day, it still remains at a high level.

Vice Minister Bang said, "Recent external conditions are exerting upward pressure on the won-dollar exchange rate, raising concerns about a one-sided concentration of sentiment in the foreign exchange market, so we will closely monitor the market situation," adding, "if market concentration occurs or speculative movements expand, we will take timely market stabilization measures."

Since President Yoon Suk-yeol himself stated on the 24th that "the exchange rate is significantly weak due to the strong dollar" and pledged thorough inspection, both Chief Presidential Secretary for Economic Affairs Choi Sang-mok the previous day and Vice Minister Bang today have shown vigilance toward speculative movements in the foreign exchange market.

Vice Minister Bang emphasized that if the stability that has continued since last month ends and volatility somewhat expands, they will actively respond despite concerns about an economic crisis.

He pointed out, "Globally, concerns about high inflation and economic slowdown coexist, and fragmented, country-centered policy responses are prevailing rather than international cooperation," adding, "Fragmented policy responses among countries are acting as factors that increase global economic uncertainty and expand volatility in international financial markets."

He further explained, "Our financial market is also synchronized with these global markets, and the influence of global factors is expanding," adding, "recently, the won's weakness has deepened due to the strong dollar, and the trade balance deficit continues due to rising energy prices."

However, Vice Minister Bang explained, "The recent won weakness is mainly due to external factors such as the global dollar strength rather than issues of confidence in the fundamentals of our economy," adding, "foreign capital inflows have been maintained even after the policy interest rate inversion between Korea and the U.S. at the end of July."

Meanwhile, the government evaluated the Bank of Korea's 0.25 percentage point base rate hike the previous day as in line with market expectations.

Vice Minister Bang said, "overall, the market appeared stable, but there were differentiated responses across markets such as rising government bond yields," adding, "the government and related agencies will monitor the government bond market situation and the Jackson Hole meeting results, and will make every effort to respond promptly if excessive volatility continues."

This content was produced with the assistance of AI translation services.