South Korea will consider measures to increase capital outflows if the won continues to increase its value against the dollar. Three experts said, that this intervention is needed to help the national economy dependent almost exclusively on foreign trade.
While operations to curb the volatility of the won will continue, the nation's currency authorities may also seek to spur overseas investment if the local currency were to settle on a trending exchange basis.
The government "may consider measures to stimulate foreign exchange outflows," one respondent told Reuters.
A spokesman for the Ministry of Finance declined to comment on the matter.
Rising domestic interest rates, strong exports, and intensifying US control over South Korea's foreign exchange regime have made it more difficult for Asia's fourth largest economy to grow.
Measures encouraging capital to go out of the country could help politicians remove some of the upward pressure on the currency without having to resort to direct intervention in the foreign exchange market, a staple in Seoul's relations with Washington.
The US Treasury Department kept South Korea on a "watch list" of countries in its report on foreign exchange policies of major trading partners in October last year, along with China, Japan and Germany.
The surge in the won makes South Korean products more expensive for global consumers, eroding the competitiveness of local producers.
On Wednesday, the currency was traded at a maximum of three years of 1.066 dollars per dollar, with an increase of 13% in 2017, its largest annual increase in 13 years.
Sources did not provide details of what such measures could entail and refused to elaborate when asked whether the measures could include tax breaks similar to those announced in the 2015.
In those days, South Korea offered up to 10 years of tax exemptions on investment gains from funds that invested more than 60 per cent of the assets in foreign equities. The scheme entered into force in February 2016 and expired in December.
The current account of the nation has been active for 68 whole months up to October of last year, the data reported come from the Bank of Korea.