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South Korea, Banks Tighten Dollar Marketing to Steady Sliding Won

An IMF gauge shows Korea’s dollar‑exposed assets are about 25 times larger than its onshore FX market, signaling limited capacity to absorb hedging flows.

Overview

  • The won traded near 1,474 per dollar late last week and is drifting back toward the high‑1,470s after a brief rebound.
  • The FSS is meeting major banks to curb foreign‑currency marketing as lenders cut rates on dollar deposits and offer incentives to convert dollars into won.
  • The Bank of Korea will temporarily pay interest on foreign‑currency required reserves to support onshore dollar liquidity.
  • Regulators plan reviews of insurers following a surge in dollar‑denominated product sales that officials say is fueling speculative dollar demand.
  • Authorities extended the National Pension Service’s strategic hedging and are preparing retail forward‑selling products, while analysts warn the measures may be insufficient without stronger coordination.