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🇰🇷 South Korea /Economy & Trade

Won-Dollar Rate to Stabilize After War Risk Eases, Says Deputy PM

From Hankyoreh · (4h ago) Korean

Translated from Korean, summarized and contextualized by DistantNews.

TLDR

  • South Korean Deputy Prime Minister and Minister of Economy and Finance, Koo Yoon-cheol, stated that the won-dollar exchange rate is expected to stabilize once the US-Iran war risk subsides.
  • He cited factors such as the normalization of major exchange rate policies, increased foreign currency inflows from domestic market return accounts, global bond index funds, and the semiconductor boom as reasons for the won's expected depreciation.
  • Koo also expressed the government's commitment to achieving the 2.0% economic growth forecast for the year, emphasizing the need for flexible policy responses to external uncertainties and supply chain issues.

Hankyoreh reports on Deputy Prime Minister Koo Yoon-cheol's remarks regarding South Korea's economic outlook, particularly focusing on the exchange rate and growth prospects. Koo's assertion that the won-dollar exchange rate will stabilize upon the resolution of the US-Iran conflict offers a degree of reassurance amidst global volatility. His analysis, which points to robust foreign currency inflows and a strong semiconductor sector, suggests a confidence in the underlying strength of the Korean economy.

If the US-Iran war risk is resolved, it will find stability.

— Koo Yoon-cheolThe Deputy Prime Minister directly links the stabilization of the won-dollar exchange rate to the de-escalation of geopolitical tensions.

The government's determination to meet the 2.0% economic growth target, despite external uncertainties, is a key takeaway. Koo's emphasis on agile policy responses, including coordination among financial authorities and potential measures to address supply chain vulnerabilities, signals a proactive approach. The mention of reducing reliance on oil and pursuing energy transition also indicates a forward-looking strategy to mitigate risks associated with global energy markets.

Major exchange rate policies are being completed, and the exchange rate, which is excessively detached from fundamentals (economic strength), will return to normal.

— Koo Yoon-cheolKoo explains that policy adjustments and the economy's underlying strength will help correct the current exchange rate.

From a Korean perspective, as reported by Hankyoreh, the stability of the exchange rate is crucial for managing inflation and supporting export competitiveness. The government's focus on these macroeconomic indicators reflects a commitment to maintaining economic stability and fostering growth. While international coverage might focus on the geopolitical implications of the US-Iran conflict, Hankyoreh highlights how these global events directly impact Korea's economic well-being and the government's policy responses. The article also touches upon the government's cautious stance on a second supplementary budget, prioritizing the execution of the current budget, which aligns with a fiscally prudent approach.

The won is expected to fall as foreign currency continues to be supplied to Korea due to the opening of 134,000 domestic market return accounts (RIA), the inflow of $5.1 billion in funds from the World Government Bond Index (WGBI), the announcement of the National Pension's new framework, and the semiconductor boom.

— Koo Yoon-cheolKoo outlines specific financial and economic factors contributing to the expected depreciation of the Korean won.
DistantNews Editorial

Originally published by Hankyoreh in Korean. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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