Published at 01:14 (GMT) 19 Nov

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In what looks like the latest shoe to drop on the 'capital controls' front (after Brazils' IOF tax and Taiwan's' restrictions on TWD bank deposits by foreign investors) S.Korea's Financial Services Commission has announced restrictions on the amount of forward FX transactions banks in Korea (local and foreign) can transact with local exports, to limit such dealings to 125% of the value of export receivable. If effective would presumably take some downward pressure off USD/KRW forwards and hence spot, even if the authorities are claiming it is designed to limit risk of re-run of Q4 2008 when Korea's corporates got badly burned via their ownership of 'KIKO' contracts that imposed open ended liabilities when USD/KRW shot higher in the aftermath of Lehman's' failure. More details needed but the worry is that alongside what we've seen in Brazil and Taiwan, this is the thin end of a thick capital controls wedge being driven into the emerging market currency arena. RA