SEOUL-- South Korea's finance minister said Wednesday the government is closely monitoring herd behavior in the foreign exchange market and will take proper measures to stabilize it, when needed.
Finance Minister Choo Kyung-ho made a verbal warning as the Korean currency plunged to the 1,380 level against the U.S. dollar for the first time in more than 13 years during its intraday trading.
"The won's weakness and an expansion in uncertainty in the FX market are not desirable for the economy and the financial market," Choo told a forum.
He said the government will closely monitor the market and is ready to take action to stabilize it, if needed.
Later in the day, FX authorities will hold a meeting with market participants to discuss the won's movements. The won has slid more than 14 percent against the greenback so far this year.
Choo said spikes in oil and other raw material prices pushed up import bills, dealing a blow to the country's trade and current account balances.
"But South Korea is the world's ninth-largest holder of the foreign reserves, and the International Monetary Fund also made an assessment that Korea's FX reserves are sufficient enough to absorb shocks from volatility in the FX market," he added.
The Bank of Korea (BOK), the country's central bank, also convened an emergency meeting and expressed worries that the recent won appears to be depreciating at a fast pace considering the country's economic fundamentals.
The BOK added that it will step up monitoring of the market and stand ready to take any necessary action.
South Korea posted a current account surplus for the third straight month in July, but the surplus sharply fell as the goods balance logged a deficit for the first time in about 10 years, central bank data showed.
The current account surplus came to US$1.09 billion in July, compared with a surplus of $5.61 billion posted in June.
The country logged a record trade deficit of $9.47 billion last month due to high energy costs. It posted a trade deficit for five months in a row for the first time in about 14 years.
South Korea's foreign reserves fell in August as the strong U.S. dollar reduced the conversion value of other currencies. The country's FX reserves amounted to $436.4 billion as of end-August, down $2.2 billion from the previous month.
Source: Yonhap News Agency