South Korea has revived a tool that has been dormant for 21 years to help stabilize the exchange rate: issuing special bonds of up to 20 trillion won ($13.9 billion).
South Korea issued 800 billion won of one-year securities for the first time on Thursday to replenish its foreign exchange stabilization fund. The bonds were priced at a yield of 2.75%, the Ministry of Finance said.
The issuance comes as governments across Asia grapple with their currencies at historically low levels, compounded by the prospect of tariffs from the Trump administration.
South Korean policymakers are also trying to boost sluggish economic growth and curb what they say is excessive exchange rate volatility, though details of their interventions are not immediately available.
According to recent data, authorities bought a net $192 million in foreign exchange in the third quarter of 2024 to curb exchange rate fluctuations. The National Pension Service has also begun selling dollars, which could lead to purchases of about $50 billion worth of local currency, people familiar with the matter said.
The won fell to its weakest level against the dollar since 2009 late last month, weighed down by rate cuts and political turmoil.
The last time the Ministry of Finance issued local currency-denominated stabilization bonds was in 2003.