SEOUL - The volatility of the won, coupled with the US central bank's move to taper its stimulus measures is sending alarm singals to Korean policymakers and currency authorities.
Seoul officials said Sunday that they were "closely" monitoring the foreign exchange market adding that currency risk would be the biggest hurdle for the nation's economy this year.
"We are closely analysing the recent movement in foreign exchange and stock markets and the trends in foreign investors' funds. The increased volatility would pose a great burden on the Korean economy's recovery," a Finance Ministry official said.
"The government is not considering a short-term response for now but will take measures to stabilize the market to ensure the real economy is not affected by the financial market instability," he added.
The nation's stock market started 2014 in a bearish position amid mounting concerns over the dollar's and the yen's further slide against the Korean won, which could deal a blow to the export-driven economy.
The US dollar closed at 1,050.30 won (S$1.25) on Thursday, the greenback's cheapest position against the won in more than two years.
But it weakened to 1,055.20 won at Friday's close, up 4.90 won from a trading session earlier.
The won also hovered near a five-year high against the yen, when the value of 100 yen fell below the 1,000 won mark before closing at 1,012.50 won Friday.
Top financial officials raised concerns at the time.