South Korea Launches Joint Forex Market Probe After 13 Years Amid Rate Surges

South Korea's central bank and its financial regulator have initiated a joint inspection of the foreign exchange market, a move not seen in over 13 years. The Bank of Korea and the Financial Supervisory Service are scrutinizing speculative trading practices, focusing on significant overnight surges in the won-dollar exchange rate observed in offshore markets. These fluctuations, particularly on the New York overnight non-deliverable forward (NDF) market, have raised concerns among currency authorities.

The joint inspection aims to determine if any trading activities have violated existing foreign exchange laws. Officials are paying close attention to the NDF market, where the won-dollar rate has repeatedly spiked after the Seoul market closes. This pattern of volatility, with the exchange rate climbing significantly during overnight and NDF trading sessions compared to the domestic market's closing rates, has become a point of focus for the authorities.

This marks the first such joint inspection since October 2012, when the authorities intervened to counter a downward trend in the won-dollar exchange rate. The current investigation underscores the government's commitment to maintaining stability in the financial markets and preventing illicit speculative activities that could impact the national currency.