(Bloomberg) -- South Korea is stepping up surveillance of the won after the currency tumbled to a 13-year low, with the authorities warning that they are watching for any offshore speculative factors.

There is concern that market sentiment may be one-sided as external conditions exert pressure on currencies, Finance Minister Choo Kyung-ho said, after holding discussions with the central bank, regulator and market players. The authorities will step up monitoring on possible speculative offshore FX trades, he added. 

The tone of the latest warning is stronger than a caution issued in June, and comes as the won tumbled to a 13-year low of 1,345.80 per dollar on Tuesday. In the past, South Korea has followed up its verbal warnings with actual intervention, with the authorities selling a net $8.3 billion of reserves to prop up the currency in the first three months of the year.

Authorities in the region have stepped in to support their currencies, with India, Thailand and Korea seeing their reserves drop by a combined $115 billion this year as they sold the dollar. A resurgent greenback is exerting pressure as traders brace for US policy makers to reiterate their hawkish stance at a gathering in Jackson Hole this week. 

For South Korea, a stable currency is crucial as it relies heavily on outside sources for energy and other materials needed to assemble exports. Food and transportation prices at home have also been under upward pressure from the weakening won, pushing consumer-price growth to the highest level in more than two decades.

The amount of reserves sold by South Korea is the most since at least March 2019 when the central bank started to publish the data. Back then, the won’s rapid decline due to the spillover effect from a US-China trade war spurred a series of warnings and culminated in a snap meeting between policy makers.

Policy Decision

The verbal intervention may ease the pressure on the Bank of Korea to deliver a large rate hike when it meets on Thursday, according to Shinyoung Securities Co. BOK Governor Rhee Chang-yong has signaled that a quarter point increase is likely to be in store, pointing to debt risks building among households from higher rates.

“This more or less helps reduce pressure on the BOK to consider a bigger hike again,” said Cho Yong-gu, a fixed-income strategist at Shinyoung Securities. “It’s true there’s a lot of wariness about the currency, but unless it breaches a shocking level such as 1,400 per dollar, the BOK is unlikely to want to strain itself further.”

(Updates with Finance Minister’s comment and latest prices)

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