Seoul: Shin Hyun-song, the nominee for governor of the Bank of Korea (BOK), indicated on Monday the readiness of authorities to address excessive foreign exchange volatility if necessary. Despite the recent weakening of the won, Shin emphasized that it does not indicate a crisis due to South Korea's substantial foreign currency reserves and robust economic fundamentals. According to Yonhap News Agency, Shin's comments were part of written responses submitted to the National Assembly in advance of his confirmation hearing set for Wednesday. He noted that significant currency depreciation could exacerbate inflationary pressures and increase financial burdens on domestic companies and households. Shin pointed out that while the won has dropped to the 1,480 won range per dollar, its depreciation against the U.S. dollar following the Middle East conflict has been more pronounced than that of other currencies, leading to heightened uncertainty. He affirmed that authorities will maintain vigilant monitoring of for eign exchange market conditions and will respond appropriately to any excessive exchange rate movements. He further clarified that the recent weakening of the won should not be seen as a crisis signal, citing that current foreign exchange reserves are adequate to buffer against external shocks. Shin also mentioned that South Korea's strong external fundamentals and inflows associated with its inclusion in the World Government Bond Index (WGBI) could alleviate pressure on the won-dollar exchange rate if the tensions in the Middle East are resolved. The local currency has recently been trading around the significant 1,500 won mark, reaching its weakest level since 2009, a period marked by the global financial crisis. This depreciation is attributed to the Middle East conflict, which began in late February and has led to increased global oil prices and concerns about broader economic repercussions. On Monday, the won opened at 1,495.4 per dollar, marking a 12.9 won decrease from the previous session's close. This decline followed U.S. President Donald Trump's decision to block all ships entering or leaving the Strait of Hormuz after unsuccessful peace talks with Iran.
