BOK Nominee Pledges Response to Excessive Won Weakness

Shin Hyun-song, the nominee to lead the central bank of South Korea, has signaled a readiness to intervene in the foreign exchange market to curb excessive volatility in the local currency. In written testimony submitted to parliament on Monday, Shin stated that authorities must be prepared to act if the won experiences sharp, disproportionate declines against the dollar. The remarks come as the won faced renewed pressure, weakening as much as 1.1% to reach 1,499.7 per dollar on Monday. This movement followed reports that high-stakes discussions between the United States and Iran failed to produce a deal to end the conflict in the Middle East. Investors tracking the KIWOOM F-USDKRW INVERSE ETN4 have observed the won's sensitivity to these geopolitical developments, which have driven the currency's depreciation faster than many of its global peers. > It would be necessary to respond properly if the won fell excessively. While the exchange rate had briefly stabilized around the 1,480 level, Shin noted that the overall trend since the outbreak of regional hostilities remains a concern. He emphasized that the central bank would maintain a vigilant watch over market conditions due to the prevailing high levels of uncertainty. > Although dollar-won exchange rates recently fell slightly to the 1,480 level, their increases since the Middle East war had been bigger than other currencies and uncertainty is still high, so we will closely monitor foreign exchange market conditions. Regarding broader monetary policy, the nominee identified rising inflation as a critical hurdle. He suggested that price pressures exacerbated by the Middle East conflict would be the most significant factor in determining future interest rate paths. This stance aligns with the central bank's recent decision to hold rates steady while warning of a highly uncertain economic trajectory. Despite the inflationary risks, Shin pointed to some economic buffers. He noted that downward pressure on growth is being partially offset by the resilience of semiconductor exports and the support provided by a supplementary government budget. Shin is scheduled to appear before a parliamentary confirmation hearing on Wednesday to further discuss his outlook for the nation's economy and currency stability.