The Korea Herald

소아쌤

S. Korea closely monitoring financial markets for herd behavior

By 이지윤

Published : May 8, 2013 - 21:47

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SEJONG (Yonhap News) -- South Korea is closely watching financial market conditions amid worries that market volatility could intensify down the road, the finance ministry said Wednesday.

The ministry also worried that there is a possibility that the market could see a repeat of the so-called "herd behavior" similar to what was witnessed late last year.

"The level of alert has been rising recently against foreign capital flow in and out of bond markets and movements in foreign exchange rates," the ministry said in a message sent to market players.

"Authorities are now closely watching any acts intended to expand volatility unnecessarily in the foreign currency market," it added.

The remarks are interpreted as a verbal intervention to preemptively stave off market fluctuations.

A ministry official said that the remarks are not based on any turbulence or instability unfolding now but represent a warning against possible one-sided bets on the direction of the market down the road.

The message did not stop the won's rise Wednesday, closing 4.9 won higher against the dollar from the previous day at 1,086.5. The won's arbitrated rate against Japanese yen rose to its highest point in four years and eight months, ending at 1,098.37.  The last time the rate went under 1,100 won was on Sept. 29, 2008.