The government on the 16th asked export giants, including Samsung Electronics, SK hynix, Hyundai Motor, and the three major shipbuilders, to expand currency hedging. As the won-dollar exchange rate has kept rising and neared 1,480 won, the government sent an SOS to export conglomerates holding dollars.

Currency hedging is an investment technique used to reduce the risk of losses from fluctuations in the value of foreign currency such as the dollar. For example, if $1 is 1,400 won when investing in overseas stocks, it means signing a contract in advance to receive 1,400 won per $1 when selling the stock later. Corporations sign currency hedging contracts with banks and other institutions, and financial institutions sell the dollars they hold to reduce losses from future exchange rate movements. This has the effect of releasing dollars into the market.

First Vice Minister Lee Hyung-il (second from right at the table) presides over the Major Export Companies Meeting at Government Complex Seoul in Jongno-gu, Seoul, on Dec. 16 in the morning and delivers his opening remarks. /Courtesy of Ministry of Economy and Finance (MOEF)

First Vice Minister of Economy and Finance Lee Hyeong-il held an "export corporations roundtable" at 11 a.m. on the day at Government Complex Seoul with officials from Samsung Electronics, SK hynix, Hyundai and Kia, HD Korea Shipbuilding & Offshore Engineering, Samsung Heavy Industries, and Hanwha Ocean. The Ministry of Economy and Finance (MOEF) said it "checked the recent foreign exchange market transaction status and discussed public-private cooperation measures to improve foreign exchange supply and demand."

This is the second time, following last month, that the Ministry of Economy and Finance (MOEF) publicly said it held a foreign exchange-related meeting with export conglomerates. On the 18th last month, Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol met with officials from Samsung Electronics, SK hynix, Hyundai and Kia, Hanwha Ocean, and POSCO Holdings and asked for cooperation on stabilizing the foreign exchange market.

The Ministry of Economy and Finance (MOEF) was also said to have asked attendees to submit materials related to the status of foreign exchange transactions. In response, the corporations reportedly said they would actively cooperate.

Meanwhile, the Ministry of Economy and Finance (MOEF) also said it recently launched a foreign currency operations support task force (TF) to seek cooperation with corporations on foreign exchange supply and demand.

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