The Bank of Korea (BOK) said on the 31st that it will respond if the foreign exchange market shows a clear tilt. As the won-dollar exchange rate surged into the 1,530-won range for the first time in 17 years since the global financial crisis, it effectively moved to verbal intervention.
Yoon Kyung-su, Director General of the Bank of Korea (BOK) International Department, held an unscheduled press briefing at 3:30 p.m. and said, while noting that it does not directly target a specific exchange rate level, the recent rate has been rising rapidly in terms of speed, and stated accordingly.
The time when the BOK notified the press corps that it would hold a briefing came after the exchange rate broke through 1,530 won intraday. The rate opened at 1,519.9 won, up 4.2 won from the previous day, then jumped to 1,535.9 won at 12:48 p.m.
Yoon said the won's depreciation has been considerably faster than other currency. He said it has been weakening more than twice as fast against the dollar, and the bank is watching with a sense of urgency. He added that it will respond if the divergence with other currency becomes severe.
He cited outflows of foreign stock funds as a main driver of the surge in the exchange rate. Director General Yoon said foreign stock funds have been leaving every day this month in a considerable amount of 2 trillion to 3 trillion won, and said this can be seen as the biggest factor putting upward pressure on the rate from a supply-demand perspective.
Meanwhile, in the Seoul foreign exchange market, the won-dollar exchange rate closed at 1,530.1 won, up 14.4 won from the previous weekly closing price. It is the first time since Mar. 9, 2009 (1,549 won), during the global financial crisis, that the weekly trading (9 a.m.–3:30 p.m.) closing price has broken through 1,530 won.