(LEAD) Financial authorities vow stern action against excessive volatility, one-sided FX market moves

(ATTN: UPDATES with latest figures in 5th para; ADDS more details from 6th para, new photo)

SEOUL, June 8 (Yonhap) -- Financial authorities on Monday vowed to take strict action against excessive volatility and one-sided movements in the foreign exchange market amid the weakening Korean won.

"We assess that, in addition to supply and demand factors, certain speculative foreign exchange transactions, such as non-deliverable forwards (NDFs), have recently contributed to increased volatility in the foreign exchange market," a joint statement from the Ministry of Economy and Finance and the Bank of Korea said.

"We will not tolerate excessive volatility relative to economic fundamentals or one-sided market movements, and we will respond firmly to such situations."

The strong verbal intervention came as the South Korean won has fallen sharply against the U.S. dollar.

As of 3:05 p.m., the Korean currency stood at 1,540.2 won per dollar, down 1.1 won from the previous session, after weakening to as low as 1,555 won against the greenback earlier in the day.

On Friday, the won traded at 1,538.1 won per dollar at 3:30 p.m., up 1 won from the previous session, marking the weakest level for the won since March 9, 2009.

Signs show the exchange rates of the South Korean won against other currencies at a foreign exchange booth in Myeongdong, a shopping mecca in Seoul, on June 7, 2026. (Yonhap)

Chiefs of the finance ministry, the Bank of Korea, the Financial Services Commission and the Financial Services commission held an emergency meeting on Sunday to review the foreign exchange market.

They said the recent weakness in the local currency was not driven by economic growth concerns or simple supply-demand dynamics, citing the country's record current account surplus in the January-April period and strong exports, according to officials.

Net selling by foreign investors in the stock market has accelerated downward pressure on the won, they said. Foreign investors have remained net sellers for 20 consecutive sessions since May 7 as part of portfolio rebalancing.

The broader strong-dollar trend has also weighed on the local currency, as better-than-expected U.S. employment data dampened hopes for an interest rate cut by the U.S. Federal Reserve.

However, they pointed to growing market expectations that the won-dollar exchange rate could rise further toward 1,600 won, as well as speculative activity and one-sided positioning, which they said have fueled market volatility.

They also plan to unveil measures to reduce reliance on the NDF market ahead of the around-