The Korean won strengthened by more than 20 won against the U.S. dollar Monday, falling to the 1,510s level as foreign exchange authorities mounted an all-out effort to defend the currency.
The won-dollar exchange rate closed the daytime session at 1,512.1 won, down 22.9 won from the previous trading day, as of 3:30 p.m. in the Seoul foreign exchange market. The level marks the lowest since June 1, when it stood at 1,504.3 won, while the decline was the largest in two months since April 8, when the rate fell 33.6 won.
The exchange rate opened 5.6 won lower at 1,529.4 won and rose to 1,533 won before reversing course, falling to as low as 1,509 won in the afternoon.
The decline was attributed to foreign exchange authorities signaling their strong willingness to intervene after the exchange rate spiked earlier this month.
The Ministry of Economy and Finance said Monday that relevant agencies plan to soon conduct on-site inspections and examinations to check whether there had been speculative trading or market disruption in the foreign exchange market. The day before, it issued a message that it would never tolerate excessive volatility and one-sided movements relative to fundamentals and would respond accordingly. On June 7, it also held an emergency "F4" market situation review meeting and announced that it would respond sternly to speculative trading.
In addition, the National Pension Service, a major player in the foreign exchange market, engaged in currency hedging through the sale of dollar forwards, which also worked to push the exchange rate lower. The market also viewed the easing of geopolitical risks, after Iran and Israel declared a halt to attacks, as having contributed to the won's decline.
