The Governor of the Bank of South Korea (BOK) has expressed readiness to intervene in the foreign exchange market to address the excessive volatility in the value of the won, stating that such fluctuations are unwarranted.
BOK Governor Ri Chang-yong attributed the recent instability in the won’s value to external factors influencing currency movements. He highlighted the strengthening of the US dollar and geopolitical tensions in the Middle East, along with weaknesses observed in other Asian currencies like the Japanese yen and Chinese yuan, as key drivers impacting the won’s value.
Amidst this backdrop, the won exhibited signs of recovery today (April 17), strengthening to 1,382.6 won per dollar. This marks a notable 1.26% increase following a recent downturn that saw the currency hit a 17-month low and breach the psychologically significant level of 1,400 won per dollar on Tuesday (April 16).
Governor Rhee emphasized the central bank’s preparedness to implement stability measures should market volatility persist, asserting that sufficient resources are available for intervention.
“I don’t mean we interfere with every move,” Mr. Rhee stated, “But I think basically we can intervene in the FX market.” He underscored South Korea’s array of domestic agencies and tools that could be utilized in such interventions.
The BOK’s stance underscores its commitment to maintaining stability in the currency market amidst external uncertainties and potential risks. Market participants will be closely monitoring any intervention actions by the central bank in response to ongoing volatility in the won’s value.