Koo made these remarks during an emergency market situation assessment meeting held at the Korea Federation of Banks. The meeting included Bank of Korea Governor Shin Hyun-song, Financial Services Commission Chairman Lee Ok-won, and Financial Supervisory Service Chairman Lee Chan-jin.
Participants acknowledged that while the fundamentals of the South Korean economy and its external credibility remain stable, speculative trading has accelerated one-sided trends in the market. They agreed that excessive exchange rate volatility is detrimental to the South Korean economy.
There were also analyses indicating that the one-sided trends in the foreign exchange market are influenced by offshore non-deliverable forward (NDF) derivative transactions. NDFs are a type of forward contract that involves buying and selling foreign exchange at a predetermined rate at a specified future date.
Koo emphasized the need to closely analyze these phenomena to enhance the transparency of NDF transactions, stating, "We will also prepare measures to absorb offshore NDF transactions into our foreign exchange market."
The Bank of Korea and the Financial Supervisory Service are investigating suspicious activities that exploit the weakening of the Korean won in the foreign exchange market, and they plan to take strict measures based on their findings.
Additionally, there are plans to monitor illegal transactions by import and export companies through a task force on illegal foreign exchange transactions. This aims to eradicate illegal practices where companies expedite payments for imports or excessively delay receiving payments for exports by taking advantage of rising exchange rates.
Koo noted, "Given the ongoing developments in the Middle East and trends in U.S. inflation, market volatility may increase again. We will maintain a high level of vigilance, monitor market conditions 24/7, and swiftly implement the measures we have prepared in cooperation with relevant agencies."
* This article has been translated by AI.
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