SEOUL – Given the possibility of a long period of dollar strength, South Korea’s financial regulator said on Tuesday that local banks should be more careful with their foreign-exchange liquidity positions than they were before.
In a statement, the Financial Supervisory Service (FSS) said that the advice was given during a video meeting with senior officials from major local banks and branches of foreign banks.
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Even though the won has fallen sharply against the dollar, the overall foreign exchange liquidity situation seems stable, according to the FSS. But the agency’s deputy governor Kim Young-ju told banks to be “more conservative” about how they handle liquidity.
He said banks should make sure their current foreign-exchange funding is managed well and suggested they look for new ways to get money.
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South Korean President Yoon Suk-yeol and other high-ranking officials have said that the won’s 13% drop against the dollar so far this year hasn’t been caused by problems with the country’s economy, but rather by the strength of the dollar as a whole.
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