On the 18th, the won-dollar exchange rate closed at 1,478.3 won, down 1.5 won against the U.S. dollar. The drop came as news spread that the government eased foreign-currency liquidity regulations to increase dollar inflows.

In the Seoul foreign exchange market that day, the won-dollar rate opened at 1,477.3 won, down 2.5 won from the previous session's weekly transaction closing price (as of 3:30 p.m.). It was up 2.8 won from the 2 a.m. close.

In the afternoon on the 18th, an electronic board in the dealing room at the Hana Bank headquarters in Jung-gu, Seoul shows the KOSPI down 61.9 points (1.53%) from the previous trading day at 3,994.51. /Courtesy of News1

After the open, the rate extended its decline while watching the government's exchange-rate measures. Around 10:30 a.m., news broke that the government had called in large-company officials for an emergency meeting on the exchange rate, sending the rate down to 1,474.1 won. It then rebounded slightly, but the downward trend continued as the government announced, in a joint move with related ministries, measures to ease foreign-currency regulations.

That day, related ministries and agencies, including the Ministry of Economy and Finance, the Financial Services Commission, the Bank of Korea, and the Financial Supervisory Service, said, "As a structural supply-demand imbalance in the foreign exchange market has accumulated over a long period, volatility in the recent won-dollar exchange rate is continuing," and announced the "Flexible adjustment plan for the foreign-exchange soundness system." The plan includes: ▲ deferring supervisory actions related to foreign-currency liquidity stress tests ▲ easing the forward FX position limit for foreign bank subsidiaries in Korea to 200%.

However, starting at 11:36 a.m., the rate turned higher. The won weakened as foreign selling intensified in the domestic stock market. When foreigners sell domestic stocks, demand to convert won into dollars increases, acting as an upside factor for the exchange rate. The rate then extended its gains and hovered around 1,478 won after 1 p.m.

According to the Korea Exchange (KRX), the KOSPI closed at 3,994.51, down 61.90 points (1.53%) from the previous session. Foreign investors were net sellers of 435.3 billion won in the stock market (KOSPI) that day, leading the index lower.

Park Sang-hyun, an analyst at iM Securities, said, "Today the exchange rate largely moved within a box range." Park added, "In early trading, the rate fell on caution over the foreign exchange authorities' measures, but in the afternoon it rebounded as foreign selling continued in the stock market."

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