SEOUL – Stability in the won-dollar exchange rate could be on the horizon if the current tensions in the Middle East do not escalate, suggested the governor of the Bank of Korea (BOK) on Friday. This statement comes amid fluctuating currency values influenced by international events and economic policies.
According to Yonhap News Agency, the Korean won's recent depreciation has been exacerbated by developments including Iran's drone and missile attack on Israel, and Israel's subsequent retaliatory actions. These events have heightened fears of a broader conflict that could disrupt global oil supplies and other commercial activities. "If (the conflict) does not escalate into a wider war ... and if a blockade of the Strait of Hormuz does not take place, I think the exchange rate may again shift toward stabilization," Rhee stated during a briefing with South Korean journalists.
Rhee underscored the direct impact of Middle Eastern affairs on South Korea, a country heavily dependent on oil imports from the region. He also noted the importance of international perception and response to these geopolitical shifts, especially given the potential for further escalation. On Wednesday, in a trilateral meeting in Washington with U.S. and Japanese financial leaders, serious concerns were expressed about the sharp depreciation of the South Korean won and the Japanese yen, reflecting a unified stance on the issue.
This meeting resulted in a joint statement from South Korean Finance Minister Choi Sang-mok, U.S. Treasury Secretary Janet Yellen, and Japanese Finance Minister Shunichi Suzuki, addressing the need to manage currency volatility. Additionally, Rhee commented on global economic dynamics, particularly concerning China's production capacity, highlighting the complexity of addressing trade imbalances through both economic strategies and diplomatic negotiations.