FX.co ★ South Korean Won Rises on Market Reforms

On Thursday, the South Korean won gained strength, reaching approximately 1,360 per US dollar, reversing a two-day decline. This uptick was driven by the newly elected President Lee Jae-myung's proposed market reforms, which significantly enhanced the appeal of local assets. On June 11, President Lee announced plans to reduce taxes on dividend income and enhance corporate governance. These initiatives aim to boost shareholder value and address the "Korea Discount." While investors largely responded positively to these proposals, there remain concerns about the long-term effects on corporate financial health. Concurrently, Bank of Korea Governor Rhee Chang-yong issued a cautionary note that excessive monetary easing might lead to property price bubbles and cause exchange rate instability. Although the central bank recently lowered its key interest rate to 2.5% on May 29, it has indicated a careful approach towards additional cuts. The current economic strategy, combining fiscal stimulus with a dovish monetary policy, has drawn significant investor attention towards the nation's economic stability and the potential risks within the market.