Global Market: Bank of Korea steps up won support with $9.6 billion sale

South Korea's central bank sold a net $9.612 billion through market intervention operations in the second quarter, stepping up efforts to curb weakness in the won, data showed on Wednesday, according to a report by Reuters.

The Bank of Korea's dollar-selling intervention marked the seventh consecutive quarter in which the central bank has sold foreign currency to support the won. In the first quarter, it sold a net $13.628 billion.

The latest intervention came as the won weakened to its lowest level since March 2009 during the April-June period. The currency subsequently pared some of its losses but still ended the quarter down 2.1% against the U.S. dollar.


The dollar index, meanwhile, rose 1.3% during the quarter, adding to pressure on the South Korean currency.

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According to Reuters, the central bank's continued intervention highlights persistent pressure on the won amid movements in the global currency market and a stronger dollar. The data also underscores the scale of foreign-exchange operations undertaken by South Korean authorities to limit excessive volatility in the currency.

The latest figures also show that the Bank of Korea has continued to draw on its foreign-exchange resources even as pressure on the won has moderated from its worst levels. The central bank's intervention is aimed at smoothing excessive currency moves rather than maintaining the won at a specific level, with broader global dollar trends remaining an important influence on the exchange rate.

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The report stated that the sustained dollar-selling operations come against a backdrop of heightened sensitivity in South Korea's currency markets to global monetary policy, capital flows and movements in the U.S. dollar. The won's performance remains closely watched because currency weakness can raise the domestic cost of imported goods and energy, potentially adding to inflationary pressures.

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