Foreign exchange markets should decide currency rates, the head of the Bank of Korea said on Wednesday, even as dealers reported signs that South Korea’s monetary authorities had sold dollars to support the won.

“Foreign exchange rates should be set by the market,” Bank of Korea Governor Lee Seong-tae said in a parliamentary session.

The won was quoted at 1,138.4/9.1 per dollar as of 0304 GMT, compared with Tuesday’s domestic close of 1,160 <KRW=KFTC>.

Earlier, it rose to as high as 1,119.9 as the authorities were seen selling dollars and as the U.S. rescue plan for AIG and provisions of additional funding by global central banks lifted world stock markets.

The reported intervention is the latest in a string of moves stretching back months by the authorities to arrest a steep fall in the won currency, although central bank and finance ministry officials have repeatedly said markets should ultimately decide the currency’s level. These comments have in the past been balanced by vows to take action in unstable markets.

Source: http://www.afxnews.com

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