Core Viewpoint - The South Korean authorities are taking decisive actions to stabilize the won, which has recently depreciated significantly against the dollar, reaching its lowest levels since the 2009 financial crisis. The government is implementing various measures to support the currency and prevent further depreciation [3][4]. Group 1: Currency Performance - The Korean won has strengthened against the US dollar, reaching its highest level since early November, with the dollar to won exchange rate dropping by 0.27% to 1442.06, and a weekly decline of 2.28% [1][3]. - The won had previously depreciated to 1485 won per dollar, marking a significant decline of approximately 8% against the dollar in the second half of the year, making it the worst-performing currency in Asia [3]. Group 2: Government Actions - The South Korean government has expressed its commitment to addressing the won's weakness, indicating that excessive depreciation is not beneficial. The Bank of Korea and the Ministry of Finance have held multiple meetings to discuss the issue [3]. - The government is implementing new tax measures to stabilize the foreign exchange market, including a temporary tax exemption for individual investors who convert overseas stock sale profits into won for domestic investments [4]. - The Bank of Korea has signed a $65 billion currency swap agreement with the National Pension Service to increase dollar liquidity domestically and has decided to temporarily exempt financial institutions from foreign exchange stability taxes starting next month [4]. Group 3: Market Sentiment and Forecast - Analysts note that the won is highly sensitive to negative news, with external factors affecting its performance. The currency is expected to remain within a range of 1470 to 1480 won per dollar unless other factors influence a decline [5]. - The recent interventions by the South Korean authorities, including verbal interventions and market measures, have had a positive impact on the won's performance, aided by a recovery in risk appetite and a weaker dollar [3].

Core Viewpoint - The South Korean authorities have expressed a strong commitment to stabilize the won, which has recently depreciated significantly, indicating that the current weakness of the currency is not favorable for the economy [1][5]. Group 1: Government Actions - The South Korean government plans to introduce new tax incentives for repatriating investment accounts to encourage overseas capital to return to the domestic market [4]. - Individual investors will receive a temporary tax exemption on capital gains from selling overseas stocks if they convert the proceeds into won and invest in domestic stocks within one year [4]. - The government will support major brokerages in launching forward sales products for individual investors to enhance foreign exchange risk management tools [4]. - To alleviate double taxation on dividends received by domestic companies from overseas subsidiaries, the government will increase the dividend income exclusion rate from 95% to 100% [4]. Group 2: Market Conditions - The exchange rate of the won has recently approached the psychological level of 1500 won per dollar, a threshold only breached during the 2008 global financial crisis and the 1997 Asian financial crisis [5]. - Despite various defensive measures taken by the authorities, the won continues to face downward pressure, having depreciated over 7% since the end of June [7]. - Concerns over foreign capital outflows, local investors' overseas investments, and increased investments in the U.S. are contributing to the selling pressure on the won [7]. - The South Korean authorities are determined to cap the dollar-won exchange rate by the end of the year, with expectations that the won will likely remain between 1470 and 1480 won per dollar in the short term [7]. Group 3: Institutional Responses - The National Pension Service of Korea has begun selling dollars to support the won's exchange rate [6]. - Korean brokerages have decided to suspend new marketing activities for overseas stocks amid the current market conditions [6].

Group 1 - The South Korean Ministry of Finance announced a package of tax incentives aimed at revitalizing the domestic capital market and addressing structural supply-demand imbalances in the foreign exchange market [1] - Due to the prolonged weakness of the Korean won against the US dollar, domestic investors have been increasingly investing in overseas assets, prompting the introduction of these measures [1] - Individual investors will temporarily be exempt from income tax on gains from selling overseas stocks if they convert the proceeds into Korean won and invest in domestic stocks within one year [1] Group 2 - The government will support major brokerage firms in quickly launching forward sales products for individual investors, as many retail investors currently lack adequate foreign exchange risk management tools [1] - To reduce double taxation on dividends received by domestic parent companies from overseas subsidiaries, the government will increase the dividend income exclusion rate from 95% to 100% [1] - The Korean composite stock price index (KOSPI) has risen approximately 70% this year, driven by government-led market reform measures and optimism surrounding artificial intelligence [1] Group 3 - There is a growing call for measures to encourage exporters and other companies to repatriate overseas assets to attract domestic employment and investment [1]