Government Targets Speculation and Market Manipulation as Exchange Rate Surges (Comprehensive)

Illegal Foreign Exchange Transactions Worth 415.4 Billion Won Uncovered
Task Force to Be Made Permanent

The KOSPI index started the day in a downward trend on the 10th, falling below the 8,000-point mark again after just one day. Various indices are displayed on the index board in the dealing room at the Hana Bank headquarters in Jung-gu, Seoul. 2026.06.10 Photo by Dongjoo Yoon

The foreign exchange authorities have launched a joint foreign exchange inspection targeting banks that handle foreign exchange transactions. With the recent sharp rise in the won-dollar exchange rate, the inspection aims to determine whether there have been any speculative transactions or market-disrupting activities that have fueled exchange rate volatility.

On June 10, the Ministry of Economy and Finance announced that it would begin a joint foreign exchange inspection of major foreign exchange banks, conducting both document reviews and on-site inspections starting today.

The Ministry stated, "The purpose is to examine whether foreign exchange banks have manipulated exchange rates to gain unfair profits or to allow third parties to gain such profits." The authorities will also focus on unilateral transactions made at specific times in volumes larger than customer orders, with the intention of moving prices to the disadvantage of customers.

Under the Foreign Exchange Transactions Act, any act that undermines fair trading practices by manipulating or fixing foreign exchange rates for the purpose of obtaining unfair profits or providing such benefits to third parties can result in imprisonment of up to five years or a fine of up to 500 million won.

This inspection is a follow-up measure to the emergency market monitoring meeting, which was held last weekend and chaired by Vice Prime Minister and Minister of Economy and Finance Koo Yoon-cheol, with relevant agencies in attendance.

On June 5, the won-dollar exchange rate surged to the 1,560-won range during overnight trading, and on Saturday, June 6, it reached 1,561.5 won during overnight trading. The intraday high set on that day was the highest in 17 years and three months since March 6, 2009, during the global financial crisis, when the intraday high was 1,597.0 won.

Vice Prime Minister Koo and other participants at the meeting assessed that “herd behavior in offshore non-deliverable forward (NDF) trading is impacting the domestic foreign exchange market.” They agreed to check for speculative movements or suspected market-disrupting activities that are riding the wave of the weak won, through inspections by the Bank of Korea and the Financial Supervisory Service, and to take strict action based on the results.

Meanwhile, on the same day, the Ministry of Economy and Finance also held a meeting of the pan-government "Illegal Foreign Exchange Transactions Response Task Force." The meeting was attended by the National Intelligence Service, National Tax Service, Korea Customs Service, Financial Supervisory Service, and the Bank of Korea.

The Korea Customs Service announced that since January this year, it has conducted illegal foreign exchange transaction inspections on companies with large trade and foreign exchange transaction volumes, especially those whose export and import declaration amounts showed significant discrepancies from actual trade payments. As of last month, investigations had been completed on 38 companies, uncovering illegal foreign exchange transactions totaling approximately 415.4 billion won.

The National Intelligence Service also reported that it had recently detected a company that disguised client funds as trade payments to transfer foreign currency overseas, then purchased virtual assets locally and brought them into Korea to exchange for won.

The task force plans to further strengthen investigations and crackdowns on illegal foreign exchange transactions that disrupt the foreign exchange market going forward. In particular, it will focus on cases such as excessively prepaying import payments, delaying the receipt of export proceeds, using underground banking or virtual assets for trade payments, and falsifying export and import prices to siphon off foreign currency. Upon detection, strict action will be taken under the relevant laws.

In addition, the task force, which was initially planned to operate only until the first half of this year, will now be made permanent.

This content was produced with the assistance of AI translation services.