Worries over won’s weakness


Raising interest rates to support the won risks suffocating domestic demand. Cutting rates accelerates depreciation. — Reuters

South Korea’s won has spent the past several years on a steady downward drift, losing ground not only against the US dollar, but also against the currencies of many of its major trading partners.

Each time the exchange rate approaches levels that unsettle policymakers, government officials and the Bank of Korea (BoK) repeat familiar assurances: that they are watching markets closely, that fundamentals remain strong, and that excessive volatility will be addressed.

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