Many individual investors are upset about the government’s recent move to force securities firms to stop offering cash incentives and trading fee reductions for those buying U.S. and other overseas stocks.

The Financial Supervisory Service (FSS), the country’s financial watchdog, said Sunday that brokerage firms must comply with its directive to suspend all promotional events and ads for overseas stock investments through March next year, insisting this is necessary to protect retail investors amid growing market volatility. Mirae Asset, Samsung, Kiwoom, Toss and other securities firms quickly followed the order, telling customers that they no longer provide the benefits.

But nobody buys the FSS’ argument that the latest market intervention is all about protecting investors. It is clearly part of Lee Jae Myung administration’s desperate efforts to help prop up the weakening Korean won against the greenback. Finance Minister Koo Yun-cheol and other government officials have often identified investment in U.S. stocks, along with companies that keep dollar earnings abroad, as the main culprit behind the local currency’s historic depreciation against the dollar in recent months.

The won-dollar exchange rate has surged past 1,480 won this month, nearing its highest level since March 1998,........

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