Is the S. Korean Finance Ministry Setting Up a Task Force for the Weakening Won?
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Synopsis
In response to the weakening Korean won, the finance ministry is forming a task force aimed at addressing currency issues through collaboration with key stakeholders. This initiative is critical for stabilizing the economy and supporting exporters amid rising foreign investments.
Key Takeaways
- Task force formation to tackle the won's decline.
- Collaborative efforts with exporters and securities firms.
- Monitoring of currency conversion behaviors.
- Tax incentives under consideration for overseas earnings conversion.
- Enhanced oversight of securities firms' investment practices.
Seoul, Dec 9 (NationPress) The finance ministry is actively working to establish a task force aimed at formulating strategies to tackle the declining value of the local currency. This initiative involves collaboration with exporters, securities firms, and other relevant authorities, officials reported on Tuesday.
The newly formed team, which will operate under the ministry's international finance bureau, comes in response to the Korean won's ongoing weakness. The currency has remained significantly below the crucial threshold of 1,450 won per U.S. dollar, approaching its lowest point since 2009, as reported by Yonhap news agency.
This decline has been influenced by substantial purchases of foreign securities by domestic investors and a sell-off of Korean securities by foreign investors following notable market gains.
To mitigate this situation, the task force will consistently monitor how exporters handle currency conversion and their international investment positions, while also contemplating incentives for companies that convert their foreign-currency earnings into won.
Experts indicate that exporters have recently chosen to retain their dollar earnings instead of converting them promptly, anticipating further depreciation of the local currency, a trend that has exacerbated the won's decline.
Additionally, tax incentives are being evaluated, including potential expansions of tax exemptions on dividends from overseas subsidiaries.
The anticipated task force is also expected to enhance oversight of securities firms, as authorities plan to assess whether these firms are meeting their responsibilities to adequately explain overseas investment products to clients and whether their marketing practices may lead to excessive leveraged investments.
In a separate initiative, a four-party consultative body, which includes the ministry, the Bank of Korea (BOK), the National Pension Service (NPS), and the welfare ministry overseeing the pension fund, aims to create a new framework. This framework is intended to align the NPS' investment returns with market stability and mitigate foreign exchange market volatility.
The local currency was recorded at 1,466.9 won per dollar on Monday, reflecting a decline of 1.9 won from the previous trading session.
Point of View
This initiative by the finance ministry illustrates a proactive approach to a challenging economic situation. By collaborating with various stakeholders, the ministry seeks to stabilize the currency and support exporters, which is essential for maintaining national economic health.
NationPress
09/12/2025
Frequently Asked Questions
Why is the Korean won weakening?
The Korean won is weakening due to heavy purchases of foreign securities by local investors and a sell-off of Korean securities by foreign investors following significant market gains.
What measures is the finance ministry planning to take?
The finance ministry plans to establish a task force to monitor currency conversion behaviors and consider incentives for companies converting foreign earnings into won.
How will this task force impact exporters?
The task force aims to support exporters by providing incentives and closely monitoring their currency conversion practices, which could help stabilize the won's value.
