South Korea’s won touched the weakest level since September after the government said it will consider steps to curb capital flows if needed. Government bonds dropped.
Eun Sung Soo, director general at the finance ministry, told reporters today that both new measures and tightening of existing ones will be possible. Policy makers will consider “various” financial taxes if needed and closely monitor foreign-currency debt, he said. The won also fell as investors shunned emerging-market assets after Cypriot lawmakers rejected an unprecedented levy on bank deposits.
“Recent moves in the currency show volatility has widened due to various factors in international financial markets, including Cyprus and yen movements,” said Kwon Young Sun, Hong Kong-based economist at Nomura International Ltd. “It’s prudent for authorities to try to focus their policy on risk management as they pre-emptively try to reduce volatility and also shun expectations for future currency moves.”
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