SEOUL (Reuters)

South Korea's financial authorities announced on Friday that they will ease foreign exchange regulations to enhance liquidity in the currency market, as the won is trading at a 15-year low.

The finance ministry stated, "Strict regulations restrain the efficiency of foreign exchange management, and there is a need to consider worsened foreign exchange liquidity conditions after recent events," in a joint statement with the central bank and regulatory agencies.

On Thursday, the South Korean won hit its weakest level in 15 years due to risk-averse sentiment following the U.S. Federal Reserve's cautious approach to further interest rate cuts and ongoing domestic political uncertainty.

The new measures include raising the ceiling of foreign exchange futures contracts to 75% of capital holdings for local banks (up from 50%) and to 375% for foreign bank branches in Seoul (up from 250%).

Additionally, companies will be allowed to take out loans in foreign currencies and exchange the funds for the won for investments in facilities such as equipment, property, and land purchases.

The ministry stated that it will implement these measures swiftly and will consider their expansion after reviewing their effects.