Home > Business > Finance

Bank of Korea introduces incentives to boost U.S. dollar supply as won's slide continues

Published: 19 Dec. 2025, 19:05 Updated: 19 Dec. 2025, 20:00

JIN MIN-JI
[email protected]

Bank of Korea Gov. Rhee Chang-yong speaks in a press conference on inflation held in central Seoul on Dec. 17. [NEWS1]

The Bank of Korea (BOK) announced a set of incentives for financial institutions on Friday to increase the supply of U.S. dollars in the domestic market, as the won continues to weaken against the dollar.

The BOK said it will temporarily waive the foreign exchange stability levy and pay interest on financial institutions’ excess foreign currency reserves held at the bank from January through June.

Designed to help the central bank manage the soundness of foreign-currency debt, the foreign exchange stability levy requires financial institutions to pay fees when they hold foreign-currency liabilities above a certain level.

The BOK made the decision at the emergency Monetary Policy Board meeting held earlier that day, as the won remains weak despite various government measures. It was the first such emergency meeting since December last year, following deposed former President Yoon Suk Yeol's declaration of martial law.

“We expect that easing financial institutions’ burden of paying the foreign exchange stability levy will increase incentives to supply foreign currency to the domestic foreign exchange market,” said the BOK in a statement.

The won was quoted at 1,476.3 at 3:30 p.m. on Friday after it broke past 1,480 won on Wednesday.

The foreign exchange authorities and the government have announced a series of measures aimed at strengthening the won against the greenback.

Kim Yong-beom, presidential director of national policy, convened executives from seven major export companies, including Samsung Electronics and Hyundai Motor, and asked for their cooperation in stabilizing the won, urging them not to seek short-term gains from fluctuations in the won–dollar exchange rate.

The Ministry of Economy and Finance also announced plans to relax foreign exchange regulations to boost the supply of foreign currency. The measures include postponing stress tests on financial institutions’ foreign currency liquidity until the end of June and raising the cap on forward exchange positions for foreign bank branches in Korea.

The current foreign exchange level “does not amount to a traditional financial crisis involving failing financial institutions or a risk of sovereign default, but it can be considered a crisis in the sense that the exchange rate could have a significant impact on inflation and creates an environment in which social cohesion becomes more difficult,” BOK Gov. Rhee Chang-yong said in a press conference on Wednesday, noting the inequality between those who benefit and those who incur losses from the weak won.

BY JIN MIN-JI [[email protected]]