Core Viewpoint - The South Korean government is temporarily exempting banks and financial institutions from the foreign exchange stability tax until June as part of measures to promote the supply of US dollars in the market [1][2]. Group 1: Government Measures - The six-month exemption from the special tax will be retroactive to January 1 [1][2]. - The existing mechanism requires financial institutions to pay taxes when holding foreign currency liabilities above a certain level [1][2]. Group 2: Market Impact - The tax exemption is expected to lower the cost of foreign currency borrowing and increase the supply of US dollars in the foreign exchange market [1][2]. - The measures come as the Korean won continues to depreciate against the US dollar, although it rebounded slightly following a positive statement from President Yoon Suk-yeol about the won [1][2]. - As of 3 PM local time, the exchange rate was 1,470.3 won per dollar, an increase of 9.5 won from the previous trading day [1][2].

Core Viewpoint - The Bank of Korea announced a temporary exemption of the foreign exchange stability tax for financial institutions starting next month, aimed at increasing the supply of US dollars in the domestic market [1][2]. Group 1: Policy Measures - The exemption from the foreign exchange stability tax will be in effect for six months starting from early January next year [1][2]. - The Bank of Korea will pay interest on the statutory foreign exchange reserve deposits held by financial institutions [1][2]. Group 2: Implications for Financial Institutions - The exemption is expected to lower the foreign currency borrowing costs for financial institutions, potentially increasing the supply of US dollars and other foreign currencies in the domestic market [4]. - Paying interest on foreign exchange reserves may encourage banks to hold more foreign currency, enhancing their ability to absorb liquidity shocks and helping to reduce market volatility [4]. Group 3: Market Context - These measures come at a time when the Korean won has significantly depreciated against the US dollar, with the exchange rate closing at 1479.8 won per dollar, the lowest since April 9 [4].