SEOUL: South Korea's top currency official warned on Friday that the won remains misaligned with economic fundamentals, saying authorities have sufficient capacity to stabilise the foreign exchange market if necessary.

Deputy Finance Minister Moon Ji-sung said the supply and demand dynamics of the local currency market are expected to shift in the second half of 2026, with dollar holdings by exporters likely to generate inflows through foreign exchange forwards.

"The current exchange rate remains misaligned with economic fundamentals," Moon told Reuters by phone, adding that the country's strong export sector and corporate dollar reserves did not justify the current discount on the currency.

The won strengthened 0.35 per cent to 1,504.2 per US dollar as of 0219 GMT after Moon's comments were published, reversing earlier losses.

The South Korean currency recently fell to its weakest level since March 2009, weighed down by heavy foreign equity outflows and a structurally stronger US dollar.

Moon's comments came after South Korea launched a landmark 24 hour onshore trading system for the dollar won spot market on Monday, aimed at improving market access and liquidity.