Verbal Intervention by FX Authorities... Won/Dollar Exchange Rate Plunges to 1,450-Won Range (Update)

Won/Dollar Exchange Rate Rises for Third Consecutive Day
Authorities Signal "Active Use of All Available Tools"
Exchange Rate, Which Jumped to 1,475 Won Early, Stabilizes on Decline

The won/dollar exchange rate, which had surged to 1,475 won immediately after the market opened, plummeted to the upper 1,450-won range following verbal interventionist remarks from the foreign exchange authorities.

As the won/dollar exchange rate, after rising during the session, is falling by more than 10 won, the status board in the dealing room of Hana Bank in Jung-gu, Seoul, on the 14th displays the KOSPI, won/dollar exchange rate, and KOSDAQ index. Photo by Jo Yongjun

According to the Seoul foreign exchange market on November 14, the won/dollar exchange rate was trading at 1,459.16 won as of 10:00 a.m.

On this day, the won/dollar exchange rate opened at 1,471.9 won, up 4.2 won from the previous trading day, and soared to nearly 1,475 won within 10 minutes. However, after the foreign exchange authorities issued a market stabilization message around 9:00 a.m., the rate immediately tumbled by nearly 19 won, plunging to 1,456.4 won. It is currently trading slightly higher, at around 1,459 to 1,460 won, which is about 10 won lower than the opening price.

On the morning of November 14, Deputy Prime Minister and Minister of Economy and Finance Koo Yooncheol presided over a market situation review meeting and effectively engaged in verbal intervention. The meeting was attended by Bank of Korea Governor Rhee Changyong, Financial Services Commission Chairman Lee Eogwon, and Financial Supervisory Service Governor Lee Chanjin.

They expressed concern over the increased uncertainty in the foreign exchange market, as the won/dollar exchange rate temporarily exceeded 1,470 won. They stated, "If the imbalance in foreign exchange supply and demand resulting from overseas investment persists, market participants' expectations of a weaker won could become entrenched, significantly impacting the downward rigidity of the exchange rate." They added, "It is necessary to actively utilize all available tools to respond to the situation."

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