No problem with S. Korea’s foreign currency liquidity: top financial regulator

SEOUL, Sept. 6 (Yonhap) — There is no problem with South Korea’s current foreign liquidity position in the face of rising financial market volatility, including the won’s recent slump, it said Tuesday. a leading financial regulator.

“As far as I know, the government has no intention of intervening in the market where exchange rates are determined,” Lee Bok-hyun, head of the Financial Supervision Service, told reporters after attending at a counseling event for the self-employed in Seoul. .

“The FSS monitors foreign currency liquidity on a daily basis as part of market stabilization efforts,” he added. “I don’t think there is a foreign liquidity problem.”

The local currency closed at 1,371.7 won against the US dollar on Tuesday, the lowest level in about 13 years. The won lost ground against the greenback amid rapid monetary tightening in the United States and the possibility of a global economic recession.

The fall prompted foreign exchange authorities to issue intensified warnings against herd behavior, signaling an intention to intervene to stem an excessive decline in the value of the won. The won has fallen about 12% so far this year.

The heightened uncertainty has fueled concerns over whether the country holds a sufficient amount of foreign currency reserves that could be tapped to cover short-term external debt.

Central bank data showed the country’s foreign exchange reserves stood at $436.4 billion at the end of August, down $2.2 billion from the previous month. The decline was attributed to the strength of the dollar which led to a decline in the converted value of assets denominated in other currencies.

According to internal analysis of local banks, their foreign liquidity coverage ratios – a major indicator of foreign currency liquidity holdings – stood at around 124.2% last month, well above a regulatory requirement. by 80%.