South Korea plans to ease foreign exchange regulations to improve liquidity conditions

South Korea's financial authorities said on Friday that they will ease foreign exchange controls to improve liquidity conditions in the foreign exchange market as the won fell to its lowest level in 15 years. "Stringent supervision has limited the efficiency of foreign exchange management, and it is necessary to take into account the deterioration of foreign exchange liquidity conditions after recent events," the finance ministry said in a joint statement with the central bank and regulators. According to the statement, the maximum limit of foreign exchange futures contracts for domestic banks and foreign banks' Seoul branches will be raised to 75% and 375% respectively from the current 50% and 250%. In addition, if companies use foreign currency loans for investment in facilities such as equipment, real estate, and land, they can convert the loans into South Korean won. The Ministry of Finance said it would implement the measure promptly and consider expanding it after evaluating its effectiveness.