Recent FX volatility excessive compared to Korea's fundamentals: official

Recent volatility in the Korean won appears excessive relative to the country's strong economic fundamentals, a senior financial official said Wednesday, noting the government stands ready to take necessary measures if the need arises. Second Vice Finance Minister Huh Chang made the remarks during a meeting with representatives from foreign banks and investors, including Goldman Sachs and Deutsche Bank, where participants exchanged views on recent market conditions, according to the Ministry of Finance and Economy. During the meeting, Huh said the Korean financial market has faced external uncertainties, including stalled peace talks related to the Middle East conflict and growing concerns over global inflation, which prompted foreign investors to sell local shares. The second vice finance minister, however, said volatility in the foreign exchange market appears excessive compared with the country's overall economic fundamentals. The government is closely monitoring the foreign exchange market to prevent speculative trading and plans to take action when necessary, he added. According to the finance ministry, officials from the foreign financial firms shared the view that volatility in the foreign exchange market is likely to ease if external factors, such as the Middle East crisis, are resolved. The recent sell-off in Seoul shares by foreign investors was seen as part of portfolio rebalancing and profit-taking following the Korean market's sharp gains, they added. Huh said the government will continue efforts to bring the local capital market in line with global standards and support foreign firms in making long-term investments in the country. The Korean won traded at 1,512.2 won against the greenback as of 2 p.m., down 4.4 won from the previous session.