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| The headquarters of the Financial Supervisory Service located on Yeouido, Seoul / Yonhap |
By Anna J. Park
As the won-dollar foreign exchange rate continues to skyrocket, the Financial Supervisory Service (FSS) has decided to monitor local banks as well as the local operations of foreign banks for their preparations in foreign reserves.
The FSS held a meeting, Tuesday, with local major commercial banks and foreign banks' Seoul operations, including JPMorgan, Deutsche and BNP Paribas, to discuss their contingency plans amid the increased volatility in the market.
In their discussion about the current market situation, the participants said that current foreign reserves and foreign currency swap markets in the country are estimated to remain stable, unlike the situation witnessed back in 2008 during the global financial crisis. Yet, they expressed concerns that the dollar's strength is likely to continue, given that the current foreign exchange rate reflects externally unfavorable economic factors, such as the global recessional cycle and the reduction of global trade. The won-dollar exchange rate closed at 1,373.5, Tuesday, up 1.5 won from the previous day. The Korean won has been slumping against the U.S. dollar to its lowest level in more than 13 years, as global liquidity is seeking safer assets following signs from the U.S. Federal Reserve of further hawkish monetary tightening. ?
The financial authority said that they're planning to proactively respond to the market, as it closely monitors the situation of foreign liquidity to maintain it at a stable level. The FSS also plans to establish communication hotlines with local banks and foreign banks' local branches to increase the level of cooperation between them.
