South Korea will do its utmost to contain severe fluctuations in the currency market led by speculators and wavering market sentiment, the country's top economic policymaker said Friday.
"The foreign exchange rate should be determined by supply and demand and economic fundamentals," Finance Minister Han Duck-soo said in a speech to an economic forum. "We will continue efforts to stabilize any 'irregular' movements in themarket."
The minister's comments come as the South Korean won soars against the U.S. dollar. The local currency climbed 1.1 per cent to 974 won against the greenback on Thursday, the strongest conversion rate since Nov. 5, 1997.
Market experts anticipate seeing a further rise against the dollar due largely to improvement in the South Korean economy and the greenback's relatively weak standing around the world.
Asia's fourth-largest economy is expected to grow around 5 per cent this year, accelerating from last year's estimated gain of 3.8 per cent, on improving private spending and strong exports.
Commenting on the won's recent surge against the U.S. dollar, Bank of Korea Gov. Park Seung said on Thursday it has appreciated "too much" and should stay at a level similar to last year's if there are no speculative moves in the market. The central bank kept its benchmark rate unchanged at 3.75 per cent on the same day that the stronger currency helped to cool inflation by cutting the price of imports.