The South Korean government Tuesday expressed concern about the recent tumble of the local currency against the U.S. dollar and hinted at possible intervention in the currency market, helping stabilize investor sentiment and prevent the won from further declining.
"We are concerned about the pace of the won's recent steep decline," said Shin Je-yoon, deputy finance minister for international affairs. "We, along with the Bank of Korea (BOK), will run a task force which will closely monitor the currency market and if market jitters continue, foreign exchange authorities will take necessary measures."
Shin is the first ministry official to comment after the local currency market and the main bourse were hit hard the previous day.
On Monday, the won plunged 31.9 won to 1,029.2 won against the dollar, the lowest level since Dec. 12, 2005. The benchmark KOSPI plunged 1.61 percent.
The local currency market seemed to gain some stability after the official's comment. The won trading at 1,027.55 won to the U.S. dollar as of 9:58 a.m., up 1.65 won from Monday's close.
Some market observers had speculated that the lack of government comment on the won's depreciation signaled the government wanted to let the won fall further, as a weak currency could help the nation's export-driven economy. The BOK, the
nation's central bank, earlier expressed concern over the pace of the won's appreciation.
Since its inauguration last month, the new government has pledged to put top priority on controlling inflation to help stabilize people's livelihoods. It also aims to achieve around 6-percent economic growth this year by encouraging corporate investment and domestic consumption.
Experts say the fall of the local currency could help boost exports in overseas markets but might serve as a downside factor for Asia's fourth-largest economy, as it may cause a buildup in inflationary pressures by raising prices of imported raw materials. (Yonhap)