Korea warns against speculative bets amid won's sharp fall
A currency trader watches monitors at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, Aug. 22. AP-Yonhap
Korea's foreign exchange authorities on Tuesday issued a verbal warning that they will closely monitor whether there are speculative bets in the currency market amid the local currency's sharp weakness.
The warning came a day after the Korean currency slid to the 1,330 won level against the U.S. dollar for the first time in more than 13 years amid the Federal Reserve's aggressive rate hikes.
"We will closely monitor whether there are speculative bets from the offshore (market) at a time when the won has depreciated amid a globally strong dollar," the FX authorities said.
The local currency hit a yearly low of 1,345.20 won against the greenback at one point after the market opened. But the won pared its earlier loss to trade higher against the dollar after the verbal warning.
The Korean currency was trading at 1,337.20 won per dollar as of 10:09 a.m., up 2.60 won from the previous session.
The U.S. dollar remained firm against major currencies amid the prospect that the Fed will likely continue to push for aggressive monetary tightening to tame inflation.
Market players are waiting for Fed Chair Jerome Powell's comment on inflation and the rate policy at the upcoming annual Jackson Hole economic symposium set for later this week.
Since the Korean currency fell to the 1,300 level for the first time in nearly 13 years on June 23, the won's weakness has accelerated. The won has slid more than 11 percent against the dollar so far this year.
Seoul's main stock index traded lower on Tuesday morning, weighed down by worries about the Fed's rate hike drives. The KOSPI fell 10.83 points, or 0.44 percent, to trade at 2,451.07 as of 10:09 a.m. (Yonhap)