South Korea's Ministry of Economy and Finance said it met major exporters, alongside the Ministry of Trade, Industry and Energy, to review recent foreign exchange trading conditions and discuss public-private measures to reduce market volatility. The discussion focused on steps companies could take to improve foreign exchange supply and demand, particularly prompt conversion of export proceeds and increased inflows of funds retained overseas. The ministry linked the recent increase in volatility to renewed Middle East risks and foreign investors' portfolio adjustments amid strong domestic equity market performance. It nevertheless assessed South Korea's external position as solid, citing a current account surplus at record levels and ample foreign currency liquidity, while warning that a persistently high exchange rate inconsistent with underlying economic conditions could increase burdens on companies and households and weigh on the recovery in domestic demand. The Ministry of Trade, Industry and Energy said the government will strengthen support for companies facing higher raw material costs caused by the exchange rate, including expanded import insurance with preferential loan guarantee limits of up to double. Participating exporters said excessive exchange rate volatility raises hedging costs and management uncertainty, and agreed to cooperate more actively with government efforts to stabilize foreign exchange supply and demand.

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