Exchange Rate Surpasses 1480 Won... FSS "Full Support for Foreign Currency Loan Extensions"

FSS Holds Financial Situation Review Meeting

Lee Se-hoon, Senior Deputy Governor of the Financial Supervisory Service./Photo=Jin Young-gi, Hankyung.com Reporter

The won-dollar exchange rate has surpassed 1480 won, continuing its high trajectory. The Financial Supervisory Service (FSS) has encouraged the financial sector to support export companies by extending the maturity of foreign currency loans and import letters of credit.

On the morning of the 27th, the FSS held a financial situation review meeting presided over by Senior Deputy Governor Lee Se-hoon, where they assessed the surge in exchange rates and the year-end money market trends. Despite recent volatility in the foreign exchange market and prompt corrective actions for some savings banks, the FSS evaluated that the overall financial sector and corporate funding situation remains stable. Particularly, the FSS judged that there is no large-scale fund movement between sectors in retirement pensions, where maturities are concentrated at the end of the year, and that the conditions for corporate bond issuance are favorable.

Due to the potential market instability caused by rising exchange rates, the FSS decided to communicate with the financial sector and companies to identify difficulties and provide active support. Additionally, banks were encouraged to ensure the proper implementation of support measures for export companies, such as extending the maturity of foreign currency loans and import letters of credit, and offering preferential trade bill discount rates.

In the Seoul foreign exchange market, the won-dollar exchange rate surpassed 1480 won around 11 a.m. It is the first time the exchange rate has exceeded 1480 won during the day since November 27, 2008, during the global financial crisis.

Senior Deputy Governor Lee Se-hoon stated, "We will actively support the smooth implementation of foreign exchange supply and demand improvement measures, such as raising the limit on forward exchange positions for financial companies and easing restrictions on the use of foreign currency loans, and will continuously identify improvements in foreign exchange supervision to alleviate the burden on export companies."

The financial authorities plan to ensure that measures such as rationalizing risk weights for banks, deferring stress buffer capital, and transitioning to the new solvency (K-ICS) system for insurers are utilized in line with the intent to support the real economy. Furthermore, they intend to swiftly support necessary measures to ensure that tailored debt adjustments for small business owners, support for business closures, and mutual growth finance are smoothly implemented.

Jin Young-gi, Hankyung.com Reporter young71@hankyung.com