Market Update: Korean currency volatility not at critical stage: BOK board member – Full Analysis

 

The recent volatility and weakness of the won against the dollar do not pose a serious concern, and Korea’s dollar liquidity and economic fundamentals remain solid, a member of the central bank’s monetary policy board said Tuesday.

 

Lee Soo-hyung, a member of the Bank of Korea’s (BOK) Monetary Policy Board, made the remarks during a press briefing in Seoul, as the won has depreciated markedly since the start of this month following U.S.-Israeli strikes on Iran and intensifying regional tensions.

 


The won touched the psychological barrier of 1,500 to the dollar on Monday for the first time since March 2009, when Korea was reeling from the global financial crisis.

 

“Despite the won’s depreciation, it is difficult to view this as a problem unique to us. There is also an aspect where the won is used as a proxy hedging instrument for the Taiwan dollar among East Asian countries,” Lee said. “Given the overall foreign exchange supply and demand conditions, the current exchange rate level does not yet warrant excessive concern.”

 

The board member also noted that the Middle East crisis is not expected to significantly affect the semiconductor upcycle for now, and Korea’s current account surplus remains solid.

 

“It is too early to conclude that there is a divergence from our economic fundamentals. Both the government and the BOK have measures in place to stabilize supply and demand expectations and provide reassurance,” Lee said.

 

The won had depreciated 3.84 percent against the greenback since the start of the month through Saturday, recording a steeper drop than other major Asian currencies. The Japanese yen and Chinese yuan have fallen 2.39 percent and 0.79 percent, respectively.

Yonhap