Korean Won Drops as Government Considers Trading Tax; Bonds Gain
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South Korea’s won fell for a second day after Deputy Finance Minister Choi Jong Ku proposed taxes on currency trading and bonds to limit “speculative” capital inflows. Government debt advanced.
The currency had its first monthly drop since August following pledges by officials to curb appreciation. It rose 8.3 percent in 2012, the most among 16 major currencies tracked by Bloomberg, as global funds pumped $15.1 billion into local stocks. The government wants to cut the “vicious cycle” in which fast money inflows increase won volatility, Choi said yesterday in Seoul, adding that he sometimes questions whether a flexible exchange rate is “appropriate” for South Korea.