SEOUL (Reuters) -South Korea’s financial regulator said it advised local banks on Tuesday to manage foreign-exchange liquidity positions in a more conservative manner than before given the possibility of a prolonged period of dollar strength.
The Financial Supervisory Service (FSS) said in a statement the advice was given during a video meeting with senior officials at major local banks and branches of foreign banks.
While the overall foreign exchange liquidity position appears to be stable despite the won’s sharp decline against the dollar, deputy governor Kim Young-ju of the agency recommended banks manage liquidity in a “more conservative” manner, the FSS said.
He said banks should ensure a stable management of existing foreign-exchange funding, and suggested they explore new funding avenues.
South Korean President Yoon Suk-yeol and other top officials have said the won’s 13% slide against the dollar so far this year did not reflect any issues with domestic fundamentals, but rather was largely driven by broad U.S. currency strength.
(Reporting by Choonsik Yoo; Editing by Muralikumar Anantharaman & Shri Navaratnam)
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