As the South Korean won weakens, the government will ease its foreign exchange regulations to stabilize supply and demand.

The finance ministry, the Financial Services Commission, the Bank of Korea and the Financial Supervisory Service announced the plan Thursday as a measure to promote the supply of foreign currency.

The government plans to ease the imbalance between supply and demand and exchange rate volatility by reducing banks' burdens in managing foreign-currency exposure and by giving foreign investors greater access to domestic stocks, in a bid to encourage dollar inflows.

To prevent financial institutions from stockpiling more foreign currency than necessary, the government will defer conducting stress tests of financial institutions' foreign-currency liquidity levels until the end of June.

The government will also ease its forward FX position limit, which currently caps net FX forward positions at 75 percent of equity capital, to 200 percent for domestic subsidiaries of foreign banks.