South Korea will continue to seek to ward off severe currency volatility but will not intervene in the market to bolster exports or tame inflation, a senior finance ministry official said Thursday.
"The government will do its best to minimize any excessive volatility in the currency market," Choi Jong-ku, a deputy finance minister, said. "But the government will not step in to boost exports or stabilize prices."
In a meeting with foreign correspondents in Seoul, Choi said the government will continue to cooperate with the central bank and that there will be no changes in the government's foreign exchange policy.
"The government won't target a certain foreign exchange rate, since the appropriate level is unknown," he said.
Choi's remarks came amid worries the ongoing financial turmoil and the Federal Reserve's recent pledge to keep its record-low interest rates over the next two years may affect the South Korean currency and its exports, the main driver of its economic growth.
Choi said the Fed's low-rate pledge would ease concerns on the country's exports to the U.S. but at the same time raise risks on excessive foreign capital inflows.
The government will continue efforts to counter such problems, since excessive capital flows have been one of the country's largest risk factors, he added.
The deputy minister also said South Korea is expected to be influenced by external shocks, but the impact is likely to be limited.
"It would be hasty generalization to categorize Korea as a high-risk country without considering other related factors - such as a country's growth potential, external soundness and government's policy capacity," the official said.
Choi said the country's diversified trade destinations, with emerging markets accounting for more than 70 percent of all exports, strengthened external soundness and policy capacity would help the nation weather the ongoing financial storm.