S. Korea Tries to Stem Currency’s Surge

Eighteen months ago, South Korea was buying won to prevent its currency from falling too far. Today, Seoul instructed its commercial banks to buy dollars--more than $2 billion worth--on the local foreign exchange market to help stem the won’s rise, which threatens to compromise an export-led economic recovery. A strong won is the result of the government’s success in forcing companies and banks to improve their finances by selling assets and equity to foreigners. The downside, though, is that it makes South Korean exports more expensive. The won has risen by about a fifth against the dollar in the last 12 months, the most among the 50 currencies tracked by Bloomberg. “The measure is part of our concerted efforts to stabilize the won,” said Lee Eung Baek, foreign currency team leader at the Bank of Korea, the central bank. “We are also considering stronger steps to halt a rise in our currency.”