(Bloomberg) -- Policymakers in Seoul have stepped up their commentary on the won as the currency weakens rapidly, briefly touching a key level of 1,400 per dollar for the first time since late 2022.

South Korean authorities early Wednesday said they share “serious concerns” with Japan on the recent weakness of their currencies and that they can take “appropriate steps” to counter drastic volatility. Bank of Korea Governor Rhee Chang-yong said the central bank is “ready to deploy” stabilizing measures. 

The comments came after Korea issued a rare warning on Tuesday that officials are closely watching currency movements and that one-sided foreign-exchange moves are not desirable for the economy.  

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While won weakness is often regarded as helping export competitiveness and boosting exporter profits, a rapid depreciation heightens concern over capital outflows and financial market instability — an outcome officials in Seoul would want to avoid at all costs. The currency has weakened more than 7% against the dollar this year, making it the worst performer in emerging Asia.

Following is a guide to some of the gradations of language that officials may use when speaking about the won to give an indication of how much action they are willing to take.

General Stance

  • The general stance of policymakers is that “the exchange rate is determined by the market, but steps can be taken if there is too much volatility.” On its own, the statement doesn’t necessarily carry a lot of weight. But it is used as a caution to traders when they may be prone to react sharply to events, such as an interest rate change by the Federal Reserve.


  • It is common for officials from the finance ministry and BOK to hold meetings to discuss markets when key events occur overseas, such as a Fed decision, a US election or an attack in the Middle East. When a meeting is called such as this week — specifically to discuss the impact of a certain event and accompanied by jawboning of the currency — traders should take note, though the discussions can be precautionary.
  • In rarer occurrences, authorities will call for a meeting with local players in the foreign-exchange market, such as banks, exporters and importers. These meetings tend to hold more weight as officials use the platform to communicate with traders directly regarding the currency’s moves.

Closely Monitoring

  • The next level of concern is typically when officials say they are “closely monitoring” the market, though this shouldn’t be seen as a signal of imminent action.

Take Steps

  • Officials may say they can take steps or action to stabilize markets when the currency approaches a key level or is showing rapid movement. This can indicate that authorities are ready to go into the market at any moment, but will never confirm intervention at the time and maintain that it is always limited to “smoothing operations.”

Stern, Swift

  • A pledge of stern or swift action shows a higher level of determination by officials to influence the won. Traders normally speculate the comment will be accompanied by dollar-trading intervention by the authorities.

Fast, Excessive, One-sided

  • Another sign of imminent action in the market is when authorities warn that the pace of movement in the currency is rapid, or excessive. This can suggest policymakers are worried that trading isn’t in line with regional currencies, or doesn’t reflect economic fundamentals. Similar rhetoric to describe the movement of the currency may also include phrases or keywords such as “herd behavior,” or “speculative.”

Official Statements

  • The rarest and strongest form of verbal intervention is when authorities distribute official statements. Even rarer is when the statement is signed off by high-level officials at both the finance ministry and BOK, such as the one released on Tuesday. The last time the government and central bank released a joint statement was in June 2022.

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