Government on alert over won's rise

By Yoon Ja-young

The government has heightened an alert over the rapid appreciation of the Korean won against the dollar, saying that it is keeping a close watch on the won’s movement.

“We are still concerned over the steep change of the won/dollar rate. It indeed has changed dramatically during the past month,” Strategy and Finance Vice Minister Choo Kyung-ho told the media at the conference on how to improve the corporate environment held in Seoul.

At the welcoming speech for the conference, Choo said that the government will continue improving the corporate environment in terms of system and policy so that innovative firms can flourish.

The country has been concerned over the steep strengthening of its currency, with the won/dollar rate falling to around 1,020 won per dollar from 1,058.5 won on April 1. It has fallen to below 1,030 won for the first time since 2008 August.

The vice minister warned against speculators in the foreign exchange market.

“The problem here is that the foreign exchange rate goes beyond normal range when speculators are involved,” he said, adding that the government is monitoring the foreign exchange rate “24 hours a day.”

He added that recent relative stabilization in the market reflects that it is reacting to the strong determination of the government that it won’t just sit idle.

The government made verbal intervention in the foreign exchange market Friday, saying “We will take firm action against speculative moves that distort the market” in a text message sent to the market.

The first verbal intervention since last month helped slow down the pace of change.

When asked about the key interest rate, Choo said that the ministry has been talking with the Bank of Korea about economic conditions.

“The monetary policy committee will determine the rate considering diverse factors, including the market expectation,” he said.

The vice minister said that the tragedy of the sunken ferry Sewol has been affecting the economy, including consumption and tourism. He said that the effect of the incident will be taken into account when determining the direction of the economic policy for the latter half of the year.