(3rd LD) Won dips below 1,350 level per dollar for 1st time in over 13 years

▲ This photo, taken Aug. 29, 2022, shows stock and currency movements depicted on electronic signboards at a Hana Bank dealing room in Seoul. (Yonhap)

(3rd LD) S Korea-Fed meeting

(3rd LD) Won dips below 1,350 level per dollar for 1st time in over 13 years

(ATTN: UPDATES with market reaction throughout)

SEOUL, Aug. 29 (Yonhap) -- The South Korean currency on Monday sank below the 1,350 level against the U.S. dollar during its intraday trading for the first time in more than 13 years as the chief of the Federal Reserve reaffirmed a hawkish monetary policy stance to fight inflation.

The local currency expanded its earlier loss to hit a yearly low of 1,350.80 won per dollar at one point.

It was the first time that the won slid below the 1,350 level in its intraday trading since April 29, 2009, when the Korean currency hit 1,357.5 won.

The local currency was trading at 1,349.70 won per the greenback as of 1:58 p.m., down 18.40 won from the previous session's close.

The won's sharp weakness came as Fed Chair Jerome Powell voiced his resolve to fight inflation at the U.S. central bank's annual Jackson Hole meeting on Friday.

Powell said the Fed will raise interest rates "for some time" to tame inflation and the move could bring "some pain" to households and businesses with slower growth and job losses.

The local currency fell below the level of 1,340 won per dollar for the first time in more than 13 years Tuesday. The won has weakened nearly 12 percent against the dollar so far this year.

South Korea's main stock index also tumbled, tracking Wall Street's routs caused by Powell's remarks. The KOSPI plunged 52.05 points, or 2.1 percent, to trade at 2,428.98 as of 1:58 p.m.

Earlier in the day, First Vice Finance Minister Bang Ki-sun said the government plans to beef up its policy efforts to stabilize the financial market to brace for excessive herd behavior in the wake of the Jackson Hole meeting.

"As South Korea's financial market is deeply coupled with movements in U.S. and other major markets, there is a need for close monitoring and responses," Bang said at a meeting on markets.

He said the government will closely monitor Korea's currency and bond markets with "extra" caution.

Lee Bok-hyun, head of the Financial Supervisory Service, a financial regulator, held a meeting to discuss the impact of the Fed's chair's remarks at the Jackson Hole meeting and vowed to intensify monitoring of market situations that have shown a "complicated" and "prolonged" tendency of volatility that warrants closer cooperation among relevant agencies.

He, however, noted that the local financial sector is strong enough to weather external risks given that its asset health and dollar liquidity have improved significantly in the process of experiencing past crises.

The won's slide has accelerated in recent months as the Fed has swiftly and aggressively raised its key interest rates.

Bond yields, which move inversely to bond prices, also jumped in recent trading amid global rate hike drives.

The finance ministry said last week it will buy back Treasury bonds and take steps to help curb a rise in bond yields, when needed, if the bond market shows jitters.

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