South Korea: Dollar-won Moves abnormal
Official: Government will use all possible tools to stabilize the foreign exchange market.

SEOUL (Dow Jones)- The South Korean government will use all possible tools to stabilize the foreign exchange market, said a senior official at the Ministry of Finance and Economy on Friday.

"Recent dollar/won movements cannot be seen as normal. If this situation continues, we are concerned that there will be a growing negative impact on our economy," said Vice Minister of Finance and Economy Kwon Tae-Shin.

Kwon's statement comes after a meeting with senior officials from South Korean ministries and the Bank of Korea early Friday to discuss the sudden, sharp appreciation of the won against major global currencies, including the U.S. dollar.

Before the meeting, Kwon said the foreign exchange market has been moving " unstably" since mid-December.

Kwon said the dollar's KRW5 fall in the last 15 minutes of Thursday's trading session was attributed to speculative forces that need to be dealt with.

The dollar closed at KRW987.3 Thursday, down from Wednesday's KRW998.5, after trading between KRW985.1 and KRW997.8 . It was the lowest closing level since Nov. 14, 1997 .

At 0112 GMT, the dollar had recovered to KRW993.5 .

A separate statement released by the finance ministry Friday said the Bank of Korea and the Financial Supervisory Service will tackle foreign exchange speculation, which the ministry blamed for the recent volatility in the local foreign exchange market.

The government had said late last year that it would ease regulations related to foreign exchange market to further liberalize capital flow.

In easing the regulations, the central bank and the FSS were given more power, starting this year, to closely monitor irregular foreign exchange movements.

The finance ministry said Friday that the government plans to control the inflow of excess dollars from robust exports by further easing regulations that limit overseas investments by Korean residents and companies.

The changes include making it easier for Korean residents to buy property overseas and raising the cap for individuals and private businesses to invest overseas to $10 million from the current $3 million . That cap will be removed completely later this year, the ministry said.

-By Jin-Young Yook, Dow Jones Newswires; 822-732-2165; jin-young.yook@

(Jun Yang contributed to this story.)

-Edited by Mary de Wet (END) Dow Jones Newswires 01-05-06 1917ET Copyright (c) 2006 Dow Jones & Company, Inc. Top of page

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