South Korea's Currency Strategy: Navigating the Won's Future

South Korean authorities anticipate the won strengthening to around 1,400 per dollar soon, but domestic policies alone may not stabilize foreign exchange markets. President Lee Jae Myung highlighted the correlation with the Japanese yen and efforts to develop sustainable policy tools to manage exchange rates effectively.

South Korean authorities anticipate the country's currency, the won, will strengthen to approximately 1,400 per dollar within the next two months, though domestic strategies alone might not suffice to stabilize currency markets, President Lee Jae Myung asserted on Wednesday.

At a press conference, Lee affirmed the expectation of the dollar-won exchange rate dipping to around 1,400 soon. Following his remarks, the won increased by as much as 0.5% to 1,468.8 per dollar, despite having hit its weakest point since December 24, at 1,481.4, earlier that day.

Currency traders attribute the won's recent rise to the unwinding of long dollar positions post Lee's comments. Since late last year, South Korean authorities have introduced several measures to bolster a currency hovering at 16-year lows, attributing its depreciation to factors beyond domestic control and stressing a need for sustainable policy instruments.

(With inputs from agencies.)