Bangkok:The Korean won's sharp decline against the U.S. dollar earlier this year was described as "out of line" with the country's strong economic fundamentals by Finance Minister Lee Hyoung-il. This assessment was made during a meeting with reporters, following the won's recent strengthening to a two-year high against the U.S. dollar, reaching 1,330 won, compared to approximately 1,550 won in July.
According to Yonhap News Agency, Lee stated that the exchange rate is now "moving into line" with South Korea's economic fundamentals. He added that the situation will continue to be closely monitored due to potential changes in external conditions. Despite fluctuations, Lee indicated that exchange rate movements currently do not necessitate a revision in revenue projections for next year's budget, as corporate tax revenue estimates already account for both positive and negative factors.
Additionally, Lee discussed the potential benefits of a currency swap arrangement between South Korea and the United States, suggesting it could provide a "robust safety net" for the foreign exchange market. However, he clarified that this does not imply any current foreign currency liquidity issues, but rather aligns with practices in other advanced economies.
Turning to the stock market, which has experienced recent declines, Lee emphasized that South Korea's economic fundamentals remain strong. He attributed market corrections to concerns over global interest rate increases, AI and semiconductor investment returns, and geopolitical risks. With the semiconductor industry being a major part of the market, these concerns have had a significant impact.
Lee also highlighted the government's readiness to implement market stabilization measures if necessary and expressed the importance of enhancing the stock market's competitiveness by identifying new growth engines beyond semiconductors. This includes initiatives like the seven SEED projects and the K-GX initiative, which focus on areas such as nuclear energy and green transformation.
Further, Lee mentioned South Korea's plans to launch a new sovereign wealth fund next year, starting with at least 20 trillion won (approximately US$14.9 billion), aimed at long-term investments in strategic industries. This initiative has received positive feedback from international partners, though specific arrangements have yet to be finalized.
Regarding the upcoming taxation of cryptocurrency, Lee stated that the ministry is in the process of collecting opinions amid some criticism of the plan.