Seoul: Finance Minister Koo Yun-cheol announced that the government is prepared to take "decisive action" should the foreign exchange (FX) market experience excessive volatility, as the Korean won continues to weaken against the U.S. dollar. "The won tends to react more sensitively compared with other currencies," Koo stated to reporters. He emphasized that authorities are vigilant against speculative trading and one-sided market movements.

According to Yonhap News Agency, the rapid depreciation of the won has led to the establishment of a joint consultation body comprising the Ministry of Economy and Finance, the Bank of Korea, the National Pension Service (NPS), and the Ministry of Health and Welfare. This group convened for the first time on Monday to discuss strategies for balancing investment returns with FX market stability, forming what the ministry describes as a "new framework."

The minister clarified that these discussions are not a temporary measure to leverage the NPS against the won's depreciation. Instead, the initiative aims to create fundamental measures for stable pension payouts without compromising the NPS's profitability, with ongoing talks about potential medium- to long-term reforms.

The NPS, as the world's third-largest pension fund, has a significant overseas portfolio, which some market participants believe is contributing to pressure on the local currency. Analysts suggest that the discussions could involve promoting more active currency-hedging strategies by the NPS, such as liquidating part of its dollar-denominated assets if the won further weakens.

Despite hitting its weakest level since April, the Korean won has seen a rebound, strengthening against the U.S. dollar for the second consecutive session on Wednesday.