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South Korea's won drops after intervention and warnings
South Korea's currency suffered its biggest daily percentage loss in two months after suspected intervention and warnings by the finance ministry that the won was overvalued.
- Reuters
- Published: 22:52 July 26, 2007
Seoul: South Korea's currency suffered its biggest daily percentage loss in two months after suspected intervention and warnings by the finance ministry that the won was overvalued.
The ministry also said it plans to call for international efforts to seek an end to a persistently weak yen during next month's meeting of Asia-Pacific finance ministers, echoing the sentiments of some European policy makers.
Analysts said South Korea's complaint was understandable, given its reliance on exports for economic growth, while dealers said authorities sold as much as $1.5 billion worth of won to push down the currency from near-decade highs.
"Let me make it clear here that the government is worried because the won's recent rise was excessive," Deputy Finance Minister Kim Sung-jin said in response to a question during a media briefing.
"Let me also make it clear that the finance ministry and the Bank of Korea have the intention and are always prepared to take necessary measures when speculative trading moves the won excessively."
The won fell as much as 0.54 per cent against the dollar and closed at a bid of 918.1 per dollar.
"The dollar rebounded above 918 won by the close today even as there were heavy dollar offers from exporters, and this was owed mainly to strong intervention by the authorities," said a dealer at a foreign bank.
Both the finance ministry and the Bank of Korea can carry out dollar-buying intervention.
The ministry also said in a statement Minister Kwon O-kyu plans to raise the issues of a persistently weak yen and yen carry trades during next month's Apec finance ministers' meeting in Australia.
Kwon is unlikely to propose specific measures designed to reverse the yen's weakness against the major currencies, but will emphasise worries shared by many countries, another ministry official, according to another ministry official.
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