Speculative trades including NDF transactions said to be amplifying volatility

South Korea's foreign exchange authorities said Monday they would "never tolerate excessive volatility or one-sided moves against fundamentals" and would respond forcefully.

The Ministry of Finance and Economy and the Bank of Korea issued a joint statement at 11:45 a.m. Monday, saying they believed "speculative foreign exchange transactions, including offshore non-deliverable forward (NDF) trades, have amplified volatility in the foreign exchange market beyond what supply-and-demand factors alone would explain."

Screens at Woori Bank's dealing room in Jung-gu, Seoul, display the Kospi and other market data Monday morning, as the index fell below 7,500 amid concerns over further interest rate hikes by the US Federal Reserve. [Yoon Chang-bin]
Screens at Woori Bank's dealing room in Jung-gu, Seoul, display the Kospi and other market data Monday morning, as the index fell below 7,500 amid concerns over further interest rate hikes by the US Federal Reserve. [Yoon Chang-bin]

The verbal intervention was issued jointly under the names of Lee Hyeong-ryeol, director general of the Ministry of Finance and Economy's international finance bureau, and Yoon Gyeong-su, director general of the Bank of Korea's international department. The move came as the won-dollar rate breached 1,550 won for the first time since the financial crisis on a daytime trading basis.

In the Seoul foreign exchange market, the won was trading at 1,553.1 won per dollar as of 11:45 a.m. Monday, weakening 14.0 won from the previous day. The won had fallen as far as 1,555.2 won during trading but pulled back to the 1,540-won range shortly after the verbal intervention.


y2k@heraldcorp.com