South Korea warns on won volatility, signals swift action and equity-inflow measures

South Korea's finance ministry warns of heightened volatility in the won and indicates a readiness to implement stabilization measures as needed. Recent remarks suggest that the current movements in the FX market diverge from economic fundamentals. Along with this FX messaging, the ministry outlined plans to encourage investment in local equities, representing a dual approach aimed at improving capital inflows to counter currency pressures. Given the won's historically weak position against the dollar, the recent rhetoric is somewhat supportive of the KRW, especially to mitigate disorderly moves. However, without a fundamental shift in flow dynamics, verbal guidance may only cap volatility rather than reverse trends.