S. Korea tells local banks to manage FX liquidity prudently Reuters

© Reuters Photo File: South Korea’s victory note is seen in this illustration photo on May 31, 2017. REUTERS/Thomas White/Example/File photo

SEOUL (Reuters) – South Korea’s financial watchdog said on Tuesday that the dollar’s strength could be prolonged, prompting domestic banks to manage foreign currency transactions more conservatively than before.

The Financial Supervisory Service (FSS) in a statement made the recommendation during a video conference with senior officials of major local banks and branches of foreign banks.

While the overall foreign exchange liquidity position appears to be stable despite the sharp drop in the won against the dollar, the agency’s deputy governor, Kim Young-ju, advised banks to manage liquidity in a “more conservative” manner, FSS said.

The minister said that banks should ensure the stable operation of the existing foreign currency fund and also suggested that they should check new ways of earning money.

South Korea’s President Yoon Suk-yeol and other top officials said the winner, a 13 percent slide against the dollar, has shown no domestic fundamentals so far this year, instead largely driven by the strength of the broader U.S. currency.

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