Bank of Korea (BOK) Governor Kim Choong-soo said Monday that the South Korean authorities do not intervene in the foreign exchange market to ease the appreciation of the local currency against the U.S. dollar.

"The Korean government and the central bank do not intervene in the FX market. We may do the smoothing operation, but the FX rate (should) be determined by fundamentals," Governor Kim told reporters at the meeting of the Financial Stability Board (FSB)'s regional consultative group for Asia held in central Seoul.

His comments came as the South Korean won continued to rise against the greenback, which was feared to hurt exports that account for around half of the Asia's No.4 economy.

The local currency fell to 1,186 won versus the dollar in late May due to resurfacing worries about European debt problems, but it resumed its upward trend to close at 1,088.6 won to the dollar on Monday, appreciating over 7 percent from the late May's bottom.

Quantitative easing by major central banks filled the global market with ample liquidity, which continued to flow into emerging economies, including South Korea.

"We discussed liquidity in the global financial system. We have huge inflows. The reversal of this inflow was discussed. But, most of us who experienced the Asian financial crisis strengthened our intermediaries and financial markets," Zeti Akhtar Aziz, co-chair of the FSB's consultative meeting and the governor of Bank Negara Malaysia, told reporters.

The Malaysian central bank governor stressed that this volatile fund flows will not destabilize the country's financial systems at this point, saying that it has better ability to deal with this issue than before. Endi

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