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Won-dollar exchange rate eyes 1,500 as banks step up capital adequacy checks

The won-dollar exchange rate has been volatile around the 1,470 level as instability in the Middle East fuels risk-off sentiment and a stronger dollar. Some in the market cite the possibility of a rise into the 1,500s if conditions worsen. Banks are increasing monitoring because a sustained rise could lift risk-weighted assets and weigh on common equity tier 1 capital ratios. Short-term foreign currency liquidity is assessed as relatively stable.