South Korea Exposed for Rare Dollar Dump, Traders Suspect Japan-Korea Joint FX Intervention

BlockBeats News, July 31st - Market sources revealed that the South Korean foreign exchange authorities conducted a rare US dollar selling intervention on Thursday, pushing the Korean won to a nine-month high. South Korea's action was synchronized with Japan's buying of the Japanese yen and selling of the US dollar in the New York market on Thursday, which pulled the yen back from a forty-year low. The South Korean won strengthened by 2% against the US dollar on Thursday, to 1 USD to 1418.0 KRW, the strongest level since October 20th last year. The Korean won had hit a 17-year low of 1561.50 last month and has risen by over 8% this month, poised to achieve its largest monthly gain since March 2009.

A foreign exchange official from the South Korean Ministry of Economy and Finance declined to confirm this intervention. A South Korean foreign exchange trader stated that the market suspected a joint intervention by South Korea and Japan, as the two countries had previously indicated close coordination. On July 2nd, a Vice Minister of the South Korean Ministry of Economy and Finance stated in a press conference that Seoul is maintaining close communication on foreign exchange issues with Japan and other major allies. The top Japanese foreign exchange official then followed up on July 7th, stating that Tokyo is in close communication with Seoul's foreign exchange officials, citing the reason that the financial markets of the two countries sometimes exhibit similar volatile movements.