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Photo courtesy of Yonhap News |
[Alpha Biz= Kim Jisun] SEOUL, South Korea — Even the "ultra-strong card" of verbal intervention from the U.S. Treasury Secretary has failed to provide lasting relief for the South Korean Won. Despite rare remarks from Secretary Scott Bessent labeling the Korean Won as excessively undervalued, the exchange rate showed only a momentary dip before rebounding, signaling growing market resistance to government intervention.
A Short-lived "Bessent Effect" Following Secretary Bessent’s comments, the KRW/USD exchange rate opened at 1,465.0 Won on the 15th, down 12.5 Won from the previous close. However, the effect lasted less than three hours. Local investors, viewing the dip as an opportunity to buy "cheap dollars," rushed into the market, driving the rate back up to the 1,470 Won range by noon.
Market "Immunity" to Policy Measures The latest response stands in stark contrast to late last month, when aggressive government intervention slashed the rate by 33.8 Won in a single day. Market experts note that traders have developed a "tolerance" to the frequent measures rolled out by the Ministry of Economy and Finance and the Bank of Korea.
Persistent Demand: Despite Bank of Korea Governor Rhee Chang-yong freezing interest rates due to exchange rate concerns, demand for the U.S. dollar remained robust.
Diminishing Returns: Although government officials hinted at "additional measures" before the market close, the Won only gained a marginal 7.8 Won for the day, closing at 1,469.7 Won.
Why the U.S. Intervened The rare move by the U.S. Treasury Chief is interpreted as a strategic attempt to protect U.S. investment interests. A senior official from the Ministry of Economy and Finance explained, "The U.S. recognizes that the value of the Won is a crucial factor for the $20 billion in annual South Korean investment flowing into the United States."
Growing Anxiety Over 1,500 Won Threshold With more than 10 measures introduced since September last year to stabilize the currency, the market remains skeptical. "The market's reaction is becoming lukewarm, as if it has built up an immunity," said an FX dealer. "Some even speculate that the Korean government has resorted to 'borrowing the mouth' of the U.S. Treasury Secretary because their own tools are exhausted."
Analysts warn that if the current trend continues, the exchange rate will likely test the 1,500 Won "psychological Maginot Line" once again, posing a significant challenge to South Korea's macroeconomic stability.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
