On the 24th, the won-dollar exchange rate opened at 1,484.9 won, surging to the highest level since the global financial crisis. However, immediately after the opening, as the foreign exchange authorities launched strong verbal intervention, the rate fell about 26 won intraday, dropping into the 1,450-won range.
That day in the Seoul foreign exchange market, the won-dollar rate opened at 1,484.9 won, up 1.3 won from the prior day's weekly trading close (as of 3:30 p.m.). By opening price, this is the record high since Mar. 16, 2009 (1,488 won).
As the upward trend in the exchange rate continued, the foreign exchange authorities launched high-intensity verbal intervention. The Ministry of Economy and Finance and the Bank of Korea issued a market-related message that morning, saying, "An excessive weakening of the won is not desirable," and, "You will soon see the government's strong resolve and capacity to implement policy." The remarks were issued in the names of Kim Jae-hwan, director general of the International Finance Bureau at the Ministry of Economy and Finance, and Yoon Kyung-soo, director general of the International Department at the Bank of Korea.
The government also unveiled additional policies to stabilize the foreign exchange market. The Ministry of Economy and Finance announced a "domestic investment and FX stabilization tax support plan" that morning and said if an overseas stock investor sells overseas stocks and makes a long-term investment in domestic stocks, capital gains tax on overseas stocks will not be levied for one year within a certain limit. The measure was prepared on the judgment that a surge in individuals' overseas stock investment expanded demand for dollars, which is the main driver of the exchange rate's rise, and to mitigate that.
In the wake of this, the won-dollar rate fell by nearly 26 won intraday. Immediately after the verbal intervention was announced, at 9:06 a.m. the rate dropped to 1,470 won, and the decline continued, reaching 1,459.2 won at 9:40 a.m. That is a sharp drop of 25.7 won compared with the opening price. However, it edged up afterward and was at 1,462 won as of 10:12 a.m.
Min Kyung-won, an analyst at Woori Bank, said, "With the government's strong resolve to bring down and stabilize the exchange rate, and as the rate surpassed 1,480 won, caution about intervention by the authorities has spread," adding, "The perception is taking hold that the rate has reached a peak, so there is a possibility of sell orders emerging."
Cho Yong-gu, an analyst at Shinyoung Securities, said, "Verbal intervention and the tax measures confirmed that the government is strongly committed to stabilizing the exchange rate," adding, "We initially expected the year-end closing rate to be in the 1,450–1,460 won range, but in this environment, it could fall further."