SEOUL, July 22 (Xinhua) -- The South Korean government will intervene in the local currency market only under circumstances when the market is extremely volatile, South Korea's Finance Minister Kang Man-soo said Tuesday.
"The government knows well that not only foreign exchange rates but also all the other prices are determined in the market," Finance Minister Kang Man-soo told a parliamentary session in Seoul. "(We) don't intend to go against it."
"Still, the government needs to play a role when there is herd behavior (in the currency market)," Kang added.
Yonhap reported that Kang's remarks came as the minister was criticized for his clear support of a weak won policy in order to stimulate the country's exports.
The won lost more than 12 percent from the beginning of this year until early July but the currency recently strengthened as the authorities took action in the currency market by selling the U.S. dollar, Yonhap said.
The policy change toward a strong won came in response to the inflation hike which hovered at almost a 10-year high mainly due to the surging oil prices and the won's sharp decline against dollar. South Korea's consumer prices surged 5.5 percent on-year in June, the highest increase since November 1998, Yonhap said.
Kang was blamed that his policy of supporting weak won has caused high inflation with a slowing economy, Yonhap said.
Kang argued that he didn't seek a weak won policy but tried to stave off excessive fluctuations in the currency market, according to Yonhap.
