The South Korean won has weakened against major currencies including the dollar in the wake of China’s devaluation of the renminbi as well as the U.S. Federal Reserve’s tighter monetary policy.

The local currency -- which ranged between 1,070 to 1,130 won per dollar during the first half of last year -- slid almost 10 percent to hover above 1,200. In Monday trading, the Korean currency fell to a 65-month low versus the greenback to close at 1,209.8.

It is also losing ground against the euro and Japanese yen, in a reverse direction from 2014-15 when Korean exporters claimed that they were shackled in price competitiveness to then-cheap yen.

Even though the weak won might help revitalize the sluggish exports, fresh worries are mounting over the soundness of won-denominated assets such as stocks and deposits when the rapid pace of the dollar’s gain is considered.

Though the exchange rate is still believed to be well within the optimum boundary, there is a possibility that foreign investors could rush to pull out their funds if the dollar rises further on upbeat economic indices in the U.S.

Foreigners net sold local equities worth 6.2 trillion won ($5.1 billion) on the nation’s main bourse in the past three months since October, when the U.S. Federal Reserve strongly hinted at a rate hike -- which it finally did in December.

Another concern is that an estimated slump in the corporate fourth-quarter earnings might nibble away the attractiveness of won-denominated assets. The gloomy outlook may harm the fundamentals of blue chips and dent investor confidence.

In consideration of the unpleasant plunge of the local currency, the Bank of Korea should be more discreet about its rate-setting policy.

It is widely projected that the BOK will keep its base rate unchanged at 1.5 percent when its Monetary Policy Committee meets Thursday. On the other hand, there have been speculations in the market that it could choose to conduct more monetary easing in the first half to back up the government’s struggle to stimulate the economy.

But we don’t expect the central bank to select the precarious option of further lowering the base rate to another record low.

The U.S. benchmark rate has been raised to the 0.25-0.5 percent level, from formerly 0-0.25 percent. And the Fed is reportedly planning to pull it up at least above the 1 percent mark.

Further narrowing of the interest rate between Korea and the U.S. means en masse departure of inbound capital investors. Any misstep -- cutting or delaying a hike -- would also undermine citizens’ purchasing power and Korea’s GDP ranking.

To prevent any negative fallout in investor sentiment, the BOK can give signals about its intention to tilt toward rate hikes in the coming months -- as a preemptive stance.

Slow-paced hikes are likely to guarantee both reinstating the currency’s value and ensuring a soft landing for the problem of record-high household debt.