Finance officials and the Financial Supervisory Service said excessive foreign-exchange volatility is undesirable, citing Middle East tensions and U.S. rate-hike expectations while planning tighter checks on speculative won trading.
South Korea signaled a tougher stance on currency speculation after the finance minister chaired an emergency market assessment meeting and the Financial Supervisory Service (FSS), the country’s financial regulator, stepped up oversight of the foreign-exchange market. Officials said excessive volatility and one-sided positions in the won are undesirable, and attributed recent swings to Middle East tensions and expectations for U.S. Federal Reserve rate hikes. The FSS asked banks to strengthen risk-management measures and said it will inspect speculative won trading with the Bank of Korea, while authorities also pledged to review speculative activity, strictly punish speculative investments targeting the won, and probe illegal transactions by importers and exporters. Regulators said South Korea’s economic fundamentals and external credibility remain solid.