The Bank of Korea will step in to manage currency volatility if required, the reserve bank’s chief informed CNBC, explaining the current market changes as a little “excessive.”
Central bank guv Rhee Chang- yong stated external aspects are sustaining the Korean won‘s motion.
“I think the recent movement is a little bit excessive judging from what we could be justified by market fundamentals,” he informed CNBC’s Karen Tso on the sidelines of the IMF Spring conferences in Washington on Tuesday.
Rhee associated the won’s weak point to the strength of the U.S. dollar in addition to geopolitical stress in the MiddleEast Weakness in other Asian currencies like the Japanese yen and Chinese yuan are likewise impacting the won, he included.
The won enhanced on Wednesday to as high as 1,3826 per dollar, up 1.26% after striking a 17- month low and breaching a significant limit of 1,400 per dollar on Tuesday.
Stabilizing procedures
Rhee stated the reserve bank is all set to “deploy stabilizing measures” if the marketplace volatility continues and has sufficient resources to do so.
“I do not mean that we will heavily intervene every movement. But I think basically, we can deploy FX intervention,” he stated, including that the nation has “other domestic agencies” and “many tools” they can release.
Rhee Chang- yong, guv of the Bank of Korea, at an occasion throughout the spring conferences of the International Monetary Fund (IMF) and World Bank in Washington, DC, United States, on Friday, April 14, 2023.
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His remarks came as South Korea’s Finance Minister Choi Sang- mok consulted with his Japanese equivalent Shunichi Suzuki on the sidelines of the G20 Finance Ministers and Central Bank Governors Meeting in Washington D.C.
“Regarding foreign exchange market developments, the two ministers shared serious concerns about the recent significant depreciation of the Japanese yen and the Korean won, and expressed their intention to take appropriate actions against excessive movements,” South Korea’s Ministry of Economy and Finance stated in a declaration.
Sticky inflation
The Bank of Korea kept its benchmark rate of interest the same at 3.5% on Friday.
Rhee highlighted that inflation difficulties stay.
“I think our problem is that, unlike the U.S. and Europe, our headline inflation is higher than core inflation. And core inflation is moderating as expected, but headline inflation is quite sticky at this moment,” he informed CNBC.
He included that the reserve bank will not be all set to proceed rate of interest up until “we can be confident” that inflation will assemble to the target level.
