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S.Korea finance minister says more FX stabilising measures on the way

Economy Sep 25, 2022 03:55AM ET
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© Reuters. FILE PHOTO: South Korea Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho attends the G20 Finance Ministers Meeting in Nusa Dua, on Indonesia resort island of Bali, on July 15, 2022. Sonny Tumbelaka/Pool via REUTERS

SEOUL (Reuters) -South Korea's finance minister said the government would prepare more measures to stabilise the foreign exchange market, while downplaying the need for a currency swap arrangement with the United States.

The measures include using the government's foreign exchange equalisation fund to meet shipbuilding companies' FX hedging demands for their overseas orders, thereby increasing dollar supply in the onshore spot market, Choo Kyung-ho said during a televised interview on Sunday.

It is one of several measures authorities have reviewed to ease volatility in the FX market, Choo said, with the South Korean won seen weakening against the dollar at a much faster pace than most peers in recent days.

Once in place, the measure will induce some $8 billion worth of dollar supply in the local currency market by the year end, according to a separate statement released by the FX authorities.

It follows a $10 billion currency swap arrangement of between the country's central bank and state-run pension fund announced on Friday, a tool that allows the fund to finance its overseas investment with the central bank's FX reserves, instead of buying dollars in the spot market.

The authorities are also reviewing ways to help stabilise the currency market by introducing measures related to local residents' financial assets held overseas, a finance ministry official told Reuters, without providing details.

Minister Choo, asked about the possibility of a currency swap deal between the Bank of Korea and the U.S. Federal Reserve, said it would definitely be helpful for the local FX market but is not yet in urgent need under current market conditions.

S.Korea finance minister says more FX stabilising measures on the way
 

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Comments (2)
Elvis Durant
Elvis Durant Sep 24, 2022 10:59PM ET
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waste of time.....
Zen Cat
LittleZenCat Sep 24, 2022 9:25PM ET
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unfortunately these efforts may be futile in the long run. Krw will just get dumped when it reclaims a little strength, same as the jpy.
 
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