SEOUL, Nov 21: The South Korean won fell on Wednesday as investors hesitated taking bets on the currency after Finance Minister Bahk Jae-wan warned of potential regulatory action to stem the swift appreciation of the won.
The local currency finished onshore trade at 1,083.2 against the dollar, compared with Tuesday’s close of 1,082.2.
Bahk said at a weekly policy meeting in Seoul earlier on Wednesday that the government was closely scrutinising the won’s recent volatility and could take measures to curb foreign capital inflows if necessary.
‘Right now seeing as how the won has appreciated quickly against the dollar, it’s not the level the authorities are concerned about but rather the speed at which the won has firmed,’ said Sun Yoo, an economist at Woori Investment and Securities in Seoul.
‘For now the government may turn to market smoothing operations but they could strengthen the capital controls (currently in place) in December or early next year.’
Bahk’s comments came just a day after his vice minister, Shin Je-yoon told reporters the government does not believe current market conditions warrant additional measure to control inflows, boosting the won to a 14-month intraday high on Tuesday.
The won has gained more than 6 percent in value against the dollar so far this year, and currency dealers have suspected over the past several months authorities have executed market smoothing operations to slow down its appreciation.
The Bank of Korea and the Financial Supervisory Service completed a joint inspection of foreign exchange trading at banks operating in the country this week, which analysts said was also aimed at curbing the won’s movements.
The benchmark Korea Composite Stock Price Index fell 0.3 percent with foreign investors snapping up a net 137.5 billion won ($127.05 million) worth of South Korean stocks on Wednesday.
December futures on three-year treasury bonds were unchanged at 106.19.
Yields on the benchmark five-year treasury bonds and three-year treasury bonds stayed the same at 2.87 percent and 2.80 percent, respectively.
(AGENCIES)
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