Bank of Korea Prepares for Market Stabilization Amid Rising Exchange Rate

The Bank of Korea (BOK) has announced its readiness to implement market stabilization measures if financial and foreign exchange market volatility escalates excessively. This announcement follows the won-dollar exchange rate surpassing 1,450 won due to the U.S. Federal Reserve's (Fed) adjustment in the pace of interest rate cuts, signaling the BOK's intention to manage the foreign exchange market.

According to Seoul Foreign Exchange Brokerage, the won-dollar exchange rate opened at 1,453 won, marking a 17.5 won increase compared to the previous trading day's closing price (1,435.5 won, as of 3:30 p.m.). This is the first time in 15 years and 9 months that the won-dollar exchange rate has exceeded 1,450 won since March 16, 2009, when the global financial crisis originating in the United States was underway.

At a meeting held to assess the market situation related to the U.S. Federal Open Market Committee (FOMC) decision, BOK Deputy Governor Yoo Sang-dae stated, "Amid ongoing external uncertainties such as the economic policy direction of the new U.S. administration and geopolitical risks, the FOMC results indicate that the Fed's monetary policy easing could be significantly delayed." He added, "Recently, domestic financial and foreign exchange market volatility, which temporarily expanded after the declaration of martial law, is seen to be easing. However, if such external uncertainties combine with domestic political situations to expand market volatility, we will take market stabilization measures."

Earlier, the U.S. Federal Reserve decided to cut the benchmark interest rate by 0.25 percentage points, marking the third consecutive cut since September. The adjustment in the pace of U.S. interest rate cuts led to a notable strengthening of the U.S. dollar, causing the won-dollar exchange rate to soar to the 1,450 won level and heightening instability in the foreign exchange market.