South Korea Urges Exporters to Stabilize Foreign Exchange Market
Quick Look
South Korea's Finance Ministry urged major exporters like Samsung and Hyundai to convert export earnings into the won promptly to ease recent volatility in the foreign exchange market, where the won has weakened significantly against the dollar.
AI-generated summary
Why It Matters
The South Korean won has recently come under pressure, trading above 1,500 won per US dollar for 17 consecutive sessions. This volatility is attributed to foreign investors seeking to lock in profits from the stock market, despite the country's solid economic fundamentals.
By Kang Yoon-seung
SEOUL, June 11 (Yonhap) -- South Korea on Thursday called on exporters to help ease recent volatility in the foreign exchange market, which includes promptly converting their export earnings into the won to boost dollar supply.
The Ministry of Finance and Economy made the call during a meeting with major exporters, including Samsung Electronics Co., SK hynix Inc. and Hyundai Motor Group, held to discuss recent trends facing the country.
During the meeting, the ministry said the Korean won has recently come under pressure despite the country's solid economic fundamentals as foreign investors sought to lock in profits from the stock market.
The South Korean won remained above the 1,500-won level against the U.S. dollar for the 17th consecutive session through Wednesday. The currency was trading at 1,526.7 won per dollar as of 2:37 p.m. Thursday.
The ministry said the prolonged strength of the greenback against the Korean won could have adverse effects on the domestic economy and increase the burden on businesses and households, and asked exporters to help address such volatility.
The participants also discussed ways to promptly convert export earnings into the Korean currency and increase the relocation of overseas funds held by domestic companies.
On the previous day, the government vowed to take stern action against activities that undermine stability in the foreign exchange market, such as excessively prepaying import costs to overseas counterparts or using virtual assets for settlements in ways that disrupt the dollar supply.
What to Watch
AI outlook — possibilities, not facts
Exporters will increase the conversion of export earnings into the Korean won.
Likely · Short term
The South Korean won will see some stabilization.
Possible · Short term
Open Questions
- What specific actions will the government take if exporters do not comply?
- What is the expected timeline for the stabilization of the won?
- What are the potential long-term consequences for South Korean businesses and households if volatility persists?
- Are there any international factors contributing to the dollar's strength against the won?
