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Yoon Calls for Urgency After Korean Won’s Worst Month in Years

South Korean President met with economic officials on Friday, when the won traded 0.6% higher, amid talk of modest intervention in the forex market. The won hit a 13-year low recently.


South Korea's President Yoon Suk-yeol assured Musk that he would help his firms deal with unions if he set up shop in his country.
South Korea's President Yoon Suk-yeol has offered tailored benefits for Tesla and SpaceX if they wish to set up a plant in his country. File photo from August 17, 2022 by Chung Sung-Jun, pool via Reuters.

 

South Korean President Yoon Suk-yeol called on Friday for vigilance in dealing with turbulent foreign exchange markets after the won fell to a more than 13-year low.

He made the remarks at a meeting of economic officials amid concern about capital flight and a weekly opinion poll that found his approval rate had fallen to 24%, the joint-lowest since he took office six months ago. 

“We have built a stronger breakwater than in the past in terms of external soundness and already implemented market stabilising measures, but it is time to deal with the situation with a sense of more urgency,” Yoon said at the meeting.

The meeting appeared to indicate imminent intervention in markets and dealers suspected the authorities of “carrying out a smoothing operation” of modest intervention, but there was no talk of massive intervention on Friday.

The won managed to end the day’s onshore trading 0.6% higher versus the dollar but suffered a 6.47% loss for the month of September, marking the worst month since September 2011, as a souring in risk appetite hit South Korean assets.

The Bank of Korea, the central bank, also said after markets closed that it sold a net $15.41 billion for intervention in the foreign exchange market during the second quarter in addition to a net $8.3 billion it sold in the first quarter.

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Won Down 17% This Year

A statement released by the presidential office after the meeting provided no further comment by Yoon, while Finance Minister Choo Kyung-ho was cited as asking companies to cooperate in keeping stability on the foreign exchange market.

It was the third such meeting to review economic and financial conditions since Yoon took office in early May, and was also attended by a central bank official and executives from several top companies, according to the presidential office.

The won has lost 17% of its value against the US dollar this year while the benchmark KOSPI share index has slumped 28% in the same period, with foreigners selling a net 12 trillion won ($8.38 billion) in shares on the main board.

There has been a growing demand for government intervention in the markets, analysts have said. But authorities have said the volatility is mostly related to outside factors and in line with a global pattern.

Gallup Korea said on Friday the approval rate on President Yoon fell to 24% in the latest weekly survey from 28% in the previous week, compared to as high as 53% in early June.

 

  • Reuters with additional editing by Jim Pollard

 

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Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years and has a family in Bangkok.

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