SEOUL, Oct 7 (Reuters) -
The South Korean government would take steps to spur capital
inflows and ensure there were enough dollars available in the
local currency market, President Yoon Suk-yeol said on Friday,
noting that uncertainty had spread across markets.
South Korea's won has lost about 16% in value so far this
year, caught in a massive switch to dollar assets by global
investors as U.S. interest rates rose sharply, and the Ukraine
war spurred a flight to safety.
"The government will strengthen the safety valve by
taking steps to improve the dollar supply-demand situation on
the foreign exchange market," a presidential office statement
quoted Yoon as saying at a meeting of economy ministers.
He also said preparation to re-activate a stock market
stabilisation fund would be completed during this month and that
the government would take steps to spur foreign investment in
local stock and bond markets.
The finance ministry said in a statement released after
the meeting that it would prepare to have tools ready for the
authorities to supply foreign exchange liquidity to financial
institutions if needed.
The central bank said early on Friday the country posted
the largest current account deficit
in more than two years in August as global demand cooled
and higher global prices of raw materials pushed up the import
After the assurances given by Yoon and the finance
ministry, South Korea's won pared losses versus the
dollar to about 0.4% on the day from an early loss of as much as
0.8%, although dealers said the market was more influenced by a
rebound in U.S. stock index futures.
President Yoon, whose approval rate has fallen sharply
since taking office in early May, held the meeting as part of
his weekly meetings on various issues.
A weekly poll by Gallup Korea showed on Friday Yoon's
approval rating rebounded to 29% from 24% last week, when the
rating matched a previous low for his presidency. His approval
rating had stood at more than 50% in early June.
South Korea had been a frequent victim of global markets
turbulence, suffering a near sovereign default during the late
1990s Asia financial crisis and massive capital outflow during
the 2008-2009 global financial crisis.
(Reporting by Choonsik Yoo; Editing by Muralikumar
Anantharaman, Tom Hogue & Simon Cameron-Moore)