Yen Intervention Sparks Won Rally as De Facto Trilateral Coordination Takes Hold

A rare joint intervention by the US and Japan to support the yen has given the Korean won a boost, potentially pushing it back into the 1,300-won-per-dollar range.

The US Treasury bought yen in coordination with Japan's Finance Ministry, marking the first joint intervention since 1998. This move spilled over into the won, which tends to trade as a proxy for the yen due to their correlation in global markets.

South Korean authorities have maintained close consultations with Washington and Tokyo, fueling speculation about de facto trilateral currency coordination. As Moon Ji-sung, deputy finance minister for international affairs, said, 'We are maintaining close coordination with the US and Japan. We will continue to cooperate.'

The won has been gaining momentum against the dollar in recent weeks, but the latest trilateral currency coordination is expected to provide an additional boost. Analysts see a potential return of the won below 1,400 won per dollar.