S. Korea to inspect FX trading

To curb the won's strength.

This is the intention of South Korea's central bank and the Financial Supervisory Service - a financial markets regulator - in jointly investigating the banks on their foreign exchange and derivatives trading.

Analysts and traders said the move underscored the intention of policymakers to cap the won's rapid appreciation for fear it would hurt the competitiveness of exporters. Officials at the ministry and the Bank of Korea denied the argument.

"There's been an increase in (currency derivative) positions in the first half. It's partly because their equity has increased, but the US Fed implemented QE3 and conditions have changed, and so we want to closely monitor the market," said finance ministry official.

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