S. Korean finance ministry to launch task force to address weaker won

Seoul, Dec 9 (IANS) The finance ministry is working to set up a task force charged with devising measures to respond to the weakening local currency, in cooperation with exporters, securities firms and relevant authorities, officials said on Tuesday.

The new team under the ministry’s international finance bureau comes as the Korean won has remained weak, staying well below the closely watched level of 1,450 won per U.S. dollar and nearing its lowest point since 2009, reports Yonhap news agency.

The decline has been partly driven by local investors’ heavy purchases of foreign securities and a sell-off of Korean securities by foreigners following recent sharp market gains.

To address the situation, the task force will regularly monitor exporters’ currency-conversion behavior and their overseas investment positions, while considering incentives for companies that convert foreign-currency earnings into won.

Experts say exporters have recently been holding on to their dollar proceeds instead of selling them immediately, in anticipation of the further depreciation of the local currency, and the trend has contributed to additional weakening of the won.

Tax incentives are also under review, including expanding the tax exemption on dividends received from overseas subsidiaries.

The envisioned task force is also expected to strengthen oversight of securities companies, as authorities plan to examine whether securities firms are fulfilling their obligation to properly explain overseas investment products to clients and whether their marketing practices encourage excessive leveraged investment.

Separately, a four-party consultative body, comprising the ministry, the Bank of Korea (BOK), the National Pension Service (NPS) and the welfare ministry that oversees the pension fund, will devise a “new framework” to align the NPS’ investment returns with market stability and to ease the FX market volatility, the officials added.

The local currency closed at 1,466.9 won per dollar on Monday, down 1.9 won from the previous session.

–IANS

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