On the 24th, the won-dollar exchange rate fell by more than 30 won from the previous day to below 1,450 won. A one-day drop of this magnitude is the first in 3 years and 1 month since Nov. 11, 2022 (-59.1 won).
That day in the Seoul foreign exchange market, the won-dollar exchange rate opened at 1,484.9 won, up 1.3 won from the previous day. After rising to 1,486.85 won right after the open, the rate began to fall. Tracing a downward-sloping curve into the afternoon, it dropped to 1,446.5 won at 2:44 p.m. That is a decline of 38.4 won from the opening price. Although it trimmed some losses before the close, the won-dollar rate finished at 1,449.8 won, down 33.8 won from the previous day. Thanks to that, based on the weekly transaction (9 a.m.–3:30 p.m.) closing price, the rate fell below 1,450 won for the first time in a month and a half since the 6th of last month (1,447.7 won).
The day's won-dollar move is seen as stemming from forceful verbal intervention by the foreign exchange authorities and the release of tax support measures to stabilize the FX market. At 9 a.m., the Ministry of Economy and Finance and the Bank of Korea distributed a message to the press pool timed to the market open, saying, "An excessive weakening of the won is not desirable." The two institutions also said, "You will soon see that (the series of meetings held so far) was a process to organize the situation to demonstrate the government's strong resolve and comprehensive capacity to execute policy."
An hour later, at 10 a.m., the Ministry of Economy and Finance (MOEF) released three tax-support measures for FX stabilization. The gist is to create a reshoring investment account (RIA) early next year, under which investors who sell overseas stocks and invest the proceeds in domestic stocks for at least one year will receive a temporary exemption from capital gains tax on overseas stocks. In addition, ▲ up to 5 million won in income deductions for currency hedging on overseas stocks ▲ full tax exemption on dividends received by domestic parent companies from overseas subsidiaries were included. All of these suppress dollar demand in the FX market while increasing dollar supply.
Jo Yong-gu, an analyst at Shinyoung Securities, said, "It seems (the market) confirmed the government's resolve (to stabilize the exchange rate)," adding, "We need to see how continuous steps to implement the released policies will be carried out to determine whether the won-dollar rate stabilizes gradually."