South Korea flag FX volatility risks as policy divergence bites (they should call the RBI)

South Korea's finance minister has issued warnings over rising foreign exchange volatility, stressing the government's alertness amid diverging global monetary policies. Following a meeting with the Bank of Korea's governor, Finance Minister Koo Yoon-cheol indicated that authorities are closely monitoring the markets, prepared to implement measures if volatility escalates. He cautioned that significant swings in the won could lead to heightened imported inflation or eroded investor confidence. While specific actions weren't mentioned, the potential for coordinated efforts with the Bank of Korea remains open, echoing India's recent swift intervention to manage rupee volatility. The South Korean framework suggests that any sustained weakening of the won may prompt official actions led by the finance ministry. Currently, officials seem to prioritize vigilance rather than immediate interventions, highlighting the importance of FX stability as external shocks could impact asset classes significantly.