Officials said Seoul is coordinating with Japan and the United States on foreign exchange as it prepares for 24-hour dollar-won trading and weighs steps to draw offshore flows onshore.
South Korea’s vice finance officials said the won is trading out of line with economic fundamentals and signaled readiness to act if thin liquidity causes excessive moves in the dollar-won market. One of the country’s two vice finance ministers, Huh Chang, said Seoul is in close communication with Japan and other relevant countries on foreign exchange issues, while Deputy finance minister Moon Ji-sung said authorities are also maintaining channels with Tokyo and Washington. The comments came days before South Korea’s shift to a 24-hour dollar-won trading cycle on Monday. Officials said the government expects trading volume from the offshore non-deliverable forward market to migrate to the onshore spot market as trading hours are extended and is reviewing measures to encourage that. The won is down 7.4% against the dollar this year and remains near a 17-year low, even as the benchmark KOSPI index has risen about 85%, highlighting a sharp divergence between the currency and local equities.