Financial authorities vow stern action against excessive volatility, one-sided FX market moves

A dealer watches computer monitors at a dealing room of Hana Bank in Seoul, Monday. Yonhap

Financial authorities on Monday vowed to take strict action against excessive volatility and one-sided movements in the foreign exchange market amid the weakening Korean won.

"We assess that, in addition to supply and demand factors, certain speculative foreign exchange transactions, such as non-deliverable forwards (NDFs), have recently contributed to increased volatility in the foreign exchange market," a joint statement from the Ministry of Economy and Finance and the Bank of Korea said.

"We will not tolerate excessive volatility relative to economic fundamentals or one-sided market movements, and we will respond firmly to such situations."

The strong verbal intervention came as the Korean won has fallen sharply against the U.S. dollar.

As of 11:45 a.m., the Korean currency stood at 1,553 won against the dollar, down 14 won from the previous session. In the wake of the warning, the won was quoted at 1,540 won to the greenback.

The latest jolt comes as the won traded at 1,539.1 won per dollar at 3:30 p.m. on Friday, down 9.4 won from the previous session. This marked the weakest level for the won since March 9, 2009.