The Bank of Korea and the Financial Supervisory Service will conduct both written reviews and on-site inspections from Wednesday, following an emergency market monitoring meeting held last Sunday. Authorities plan to examine whether speculative trading or suspected market-disrupting activity added to the won's recent weakness.
The probe will examine whether foreign exchange banks moved or fixed currency rates to secure unfair profits for themselves or third parties. Authorities suspect that one-sided offshore non-deliverable forward (NDF) transactions may have increased pressure on the domestic currency market.
It will also cover trades aimed at disrupting normal market functions or price discovery. Transactions that moved prices against customer orders through large one-way trades at specific times will also be reviewed.
The step comes as the exchange rate has swung sharply in recent sessions. During night trading on June 6, the won weakened to 1,561.5 per dollar, marking its lowest level since March 2009.
On Tuesday, the won recovered to 1,512.1 per dollar, supported by verbal intervention and currency hedging by the National Pension Service. But volatility has remained high. It reversed course on Wednesday morning, opening weaker at 1,525.
Watchdogs said they will take stern action under relevant laws if any illegal activity is found.
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