Journalist

Kim Yeon-jae
  • Koreas Q1 growth beats expectations, but beyond hinges largely on Hormuz
    Korea's Q1 growth beats expectations, but beyond hinges largely on Hormuz SEOUL, April 24 (AJP) — South Korea’s economy grew a stronger-than-expected 1.7 percent in the first quarter, nearly double the Bank of Korea’s estimate, raising hopes for resilience despite mounting external shocks. But whether the momentum can last hinges on the duration of the nearly two-month Middle East standoff and Korea’s ability to withstand an energy shock across an economy still fragilely powered by chip exports. Following the data, the Bank of Korea (BOK) expressed confidence that the economy can weather this year’s Black Swan crisis in the Gulf. “Since the first-quarter growth rate is heavily reflected in the annual figures, we expect to meet our original growth target of 2 percent without significant difficulty,” said Lee Dong-won, director general of the central bank’s Economic Statistics Department. “The squeeze from the blockade will be reflected in second-quarter data,” Lee said. “It is clear that the conflict in the Middle East has placed upward pressure on inflation and downward pressure on economic growth.” Diplomatic efforts to resolve the crisis have stalled, with ceasefire negotiations failing to produce a breakthrough. The deadlock may partly reflect both sides’ need to replenish depleted military stockpiles. According to the Center for Strategic and International Studies (CSIS), U.S. inventories of precision-strike missiles and Tomahawk cruise missiles have fallen to 60 percent and 70 percent of peacetime levels, respectively. Inventories of the Terminal High Altitude Area Defense (THAAD) system, in particular, have been halved. Iran’s offensive capabilities also remain constrained after the destruction of key launch facilities and infrastructure. “With both sides facing mounting pressure from a war of attrition, they appear to be seeking a tactical breathing space through negotiations,” said Kim Yeol-soo, a senior research fellow at the Korea Institute for Military Affairs. Iran remains deeply skeptical of U.S. intentions after being attacked during previous nuclear talks, while Washington has refused Tehran’s demands for the restoration of frozen assets and formal recognition of uranium enrichment. High-stakes negotiations ended on April 12 without tangible results. Tensions continue in the Strait of Hormuz, with both sides seizing vessels and raising the risk of renewed military action once arsenals are replenished. The international financial community has taken note of South Korea’s performance. After the 1.7 percent first-quarter growth figure, major investment banks began raising their annual growth forecasts. Park Jeong-woo, an economist at Nomura Securities, cautioned that the upgrades remain conditional. “It is premature to conclude that inflationary pressures or downside risks to growth have subsided,” he said. The most immediate threat is a sustained surge in energy costs. Dubai crude, which averaged below $70 per barrel last year, has stayed above $90 this year. Hyundai Research Institute and other institutions warn that if the annual average oil price exceeds $100, South Korea’s consumer price index could rise by more than one percentage point, pushing inflation into the 3 percent range. Inflationary pressure is already showing in the currency market. The Korean won, which had briefly stabilized, weakened again toward the end of the week, closing at 1,484.5 per dollar on Friday. Korean government bonds, once expected to strengthen after their inclusion in the World Government Bond Index, have also weakened. As of Friday morning, the three-year yield rose 3.8 basis points to 3.496 percent, while the 10-year yield climbed 2.6 basis point to 3.817 percent, marking a level of weakness similar to late March. 2026-04-24 16:54:54
  • Chips carry Koreas Q1, but Gulf fallout looms large
    Chips carry Korea's Q1, but Gulf fallout looms large SEOUL, April 23 (AJP) — From the headline, South Korea’s economy looks robust — gross domestic product posting its strongest growth in more than five years while chipmakers log staggering margins nearing 70 percent. But beneath the surface, the expansion is widely seen peaking, exposing structural fault lines from overreliance on a single sector and mounting inflationary pressure. According to the Bank of Korea on Thursday, the nation’s GDP grew 1.7 percent from the previous quarter, the fastest pace since the third quarter of 2020. Yet the strength fades on closer inspection. The recovery remains heavily skewed toward semiconductors, underscoring a deepening K-shaped divergence within the economy. Exports contributed 1.1 percentage points — more than 60 percent of total growth — with chips alone accounting for roughly 55 percent of that figure. Without the semiconductor boom, growth would likely have stayed below 1 percent, the central bank acknowledged. Corporate earnings tell a similar story of concentration. Samsung Electronics posted 57.2 trillion won ($38.65 billion) in operating profit, while SK hynix logged 37.6 trillion won. Together, the two accounted for 66.5 percent of the 142 trillion won total operating profit expected from KOSPI-listed firms — more than doubling their share from about 26.7 percent a year earlier. The dominance is increasingly reflected in financial markets. The combined market capitalization of the two firms has surged from around 30 percent of the KOSPI early last year to 41.1 percent as of Thursday. As market movements hinge more heavily on these stocks, volatility has intensified, with the KOSPI Volatility Index more than doubling from 22 a year ago to 53. Few are willing to contemplate the downside should the chip cycle turn. Behind the headline strength, policymakers are bracing for a second-quarter inflection as the delayed impact of the Strait of Hormuz disruption begins to feed through the economy. “The impact remained minimal through the first quarter as vessels that passed through the strait before the closure arrived in Korea by late March,” said Lee Dong-won, director general of economic statistics at the Bank of Korea. “The squeeze from the blockade will be reflected in second-quarter data,” he said. “It is clear that the conflict in the Middle East has placed upward pressure on inflation and downward pressure on economic growth.” This adverse mix — rising inflation alongside slowing growth — dominated discussions at the first policy meeting between Finance Minister Koo Yun-cheol and new Bank of Korea Governor Shin Hyun-song on Thursday. The central bank has already signaled it will revise its inflation outlook closer to 3 percent this year while lowering its growth forecast from around 2 percent. Energy prices are already feeding through to the real economy. As of April 22, gasoline prices in Seoul averaged 2,041 won per liter, up 16.7 percent from 1,749.6 won at the onset of the conflict. Diesel prices, critical for logistics, climbed 21.9 percent to 2,028 won. The ripple effects are spreading across transport and trade. Korean Air’s fuel surcharge on the Incheon–Los Angeles route will jump 80.1 percent to 501,000 won starting May 1, reflecting disruptions in jet fuel supply — a key export for Korean refiners. Shipping costs are also surging. The Shanghai Containerized Freight Index (SCFI) has risen 41.5 percent from 1,333 in late February to 1,886 as of April 17, with some routes seeing freight rates increase severalfold depending on cargo and destination. Consumer sentiment is already deteriorating. The Bank of Korea said the Composite Consumer Sentiment Index fell 7.8 points in April to 99.2, slipping below its long-term average for the first time in a year — the sharpest drop since December 2024. Nearly 90 percent of households cited rising petroleum prices as their primary concern, more than 2.5 times the share worried about industrial goods. Bond yields moved in the opposite direction of the chip-blinded stock market. Both the three-year and 10-year government bond yields added around 9 basis points respectively to 3.453 percent and 3.787 percent by midday Thursday, whereas the Kospi finished a new historic high. The Korean won remains under sustained pressure. The currency has weakened about 9 percent from 1,367 per dollar in June 2025 to around 1,480 this month — a far steeper decline than the 1–2 percent depreciation seen in the Japanese yen and Chinese yuan over the same period. As external shocks begin to collide with domestic imbalances, the question is no longer how strong the first quarter was — but how quickly the momentum will unravel in the quarters ahead. 2026-04-23 16:43:51
  • UPDATE: Koreas Q1 GDP strongest in more than five years on hot chip demand
    UPDATE: Korea's Q1 GDP strongest in more than five years on hot chip demand *Updated with additional information and market response SEOUL, April 23 (AJP) — South Korea’s economy grew at the fastest pace in more than five years in the first quarter, rebounding sharply from a contraction in the previous three-month period, as feverish demand for semiconductors powering the artificial intelligence boom fueled exports and investment. According to the Bank of Korea, gross domestic product expanded 1.7 percent on quarter in the January–March period, marking the strongest growth since a 2.2 percent gain in the third quarter of 2020. The rebound follows a 0.3 percent contraction in the fourth quarter of last year, when a slump in construction investment weighed on overall activity. The KOSPI heavily led by chip stocks hit new heights, climbing above 6,500 mark by gaining 1.7 percent upon opening thanks to stronger-than-expected growth data and SK hynix earnings report. The Korean won also strengthened, with the dollar at 1,478.20, down 1.3 from overnight. Exports surged 5.1 percent on quarter, led by semiconductors and IT products, as global demand for high-performance memory chips used in AI servers and data centers remained robust. Semiconductor exports have been soaring at triple-digit rates in recent months amid the AI investment boom, underscoring their role as the economy’s main growth engine. Facility investment rose 4.8 percent as companies ramped up spending on machinery and transportation equipment to expand production capacity, particularly in chipmaking and related industries. Construction investment, long a drag on growth, also showed signs of recovery, rising 2.8 percent on quarter, supported by base effects and a modest pickup in both building construction and civil engineering projects. A broad upward trend was also observed across various sectors. Manufacturing GDP, the backbone of the Korean economy, climbed 3.9 percent, on brisk activity on the assembly lines for computers, electronics, and optical instruments. This marks the first time the manufacturing sector has surpassed the 3 percent growth threshold since the first quarter of 2022, aided by the semiconductor boom and a base effect following a 1.5 percent decline in the previous quarter. Construction GDP also rose 3.9 percent, ending a period of stagnation or decline. It is the first time since the first quarter of 2024 that the construction sector has recorded a growth rate above 1 percent. The agriculture, forestry, and fisheries sector increased 4.1 percent, led by crop production, marking two consecutive quarters of growth. The domestic demand, however, remained fragile. The services sector added 0.4 percent and private consumption 0.5 percent. Real gross domestic income (GDI), which reflects actual purchasing power by factoring in terms of trade, recorded a steep 7.5 percent jump - the largest increase in 38 years, since the 8 percent rise seen in the first quarter of 1988. The surge is attributed to a significant improvement in the terms of trade, as export prices and volumes spiked by 28.7 percent and 23 percent in March - also driven by chips. 2026-04-23 08:09:19
  • Koreas consumer confidence turns negative from energy concerns
    Korea's consumer confidence turns negative from energy concerns SEOUL, April 23 (AJP) -South Korea's consumer confidence turned negative for the first time in a year, weighed down by worries over supply-side repercussions on inflation and economic performance from a Gulf-triggered energy shock, data showed Thursday. According to the Bank of Korea (BOK), the consumer sentiment index for April dipped 7.8 points to 99.2, the first time below the 100 threshold in a year. A reading below 100 indicates pessimism outweighs optimism compared with the long-term average. The monthly fall is the steepest since December 2024 amid the shock from a brief martial-law declaration. The drop was broad-based, reflecting a sharp deterioration in both household finances and perceptions of the broader economy. Sub-indices tracking household conditions all weakened. The index for current living standards fell 3 points to 91, while expectations for future living conditions dropped 5 points to 92. Outlooks for household income and spending also declined, each falling 3 points to 98 and 108, respectively. Perceptions of the economy turned decisively dimmer. The index measuring current economic conditions plunged 18 points to 68, while the outlook for future conditions dropped 10 points to 79. Job prospects also deteriorated, with the employment outlook index down 7 points to 82. The data underscore how external shocks are increasingly feeding into domestic sentiment, as households brace for a combination of rising costs and slowing growth. Inflation concerns intensified. The expected inflation rate for the coming year rose to 2.9 percent, up 0.2 percentage point from the previous month, with the anticipation for price rise spiked 4 points to 153 whereas that for income stayed stagnated at 120 to suggest bias for tightening in spending. Consumers pointed overwhelmingly to energy-linked costs as the main driver of price pressures. Petroleum products were cited by 88.8 percent of respondents as the key factor influencing inflation expectations, followed by industrial goods at 33.1 percent and public utilities at 31.4 percent. The surge in energy-related concerns comes amid heightened volatility in global oil markets following disruptions in the Middle East, reinforcing fears of cost-push inflation rippling through the economy. Interest rate expectations also moved higher, with the index climbing 6 points to 115, reflecting growing anticipation that borrowing costs could remain elevated or rise further. The April survey was conducted from April 9 to 16 among 2,262 households nationwide. 2026-04-23 07:36:42
  • Polarization deepens as two chip giants dominate KOSPI
    Polarization deepens as two chip giants dominate KOSPI SEOUL, April 22 (AJP) -South Korea's main bourse is flying to new heights and exports remain resilient despite Gulf shocks, but the momentum is increasingly powered by a single engine — chips. Memory giants Samsung Electronics and SK hynix now account for about 67 percent, or 137.3 trillion won ($XX billion), of total first-quarter operating profits among South Korean companies, according to financial data provider FnGuide. That is more than double last year’s share, when the two firms contributed less than 30 percent of the total. Samsung Electronics alone posted more than 57 trillion won in operating profit for the first quarter, surpassing the combined total of all KOSPI-listed companies during the same period last year. SK hynix, a pure-play memory chipmaker, is also on track for outsized results, with its first-quarter operating profit expected to exceed 40 trillion won in its earnings report due Thursday — nearing its full-year earnings level. Their stellar performances are attributed to both companies securing strong positions in the semiconductor market while achieving sustained growth in high-value chips such as high-bandwidth memory (HBM), used in artificial intelligence (AI)-related infrastructure. The outlook for other major players, however, remains bleak. Hyundai Motor Company, despite steady sales, is expected to see its first-quarter operating profit decline by more than 1 trillion won year-on-year, partly due to a 15 percent reciprocal tariff in the North American market. LG Energy Solution is also projected to remain in the red following the termination of contracts with Ford Motor Company and Freudenberg Battery Power Systems. This imbalance has fueled a rally in the stock market. On Wednesday, the benchmark KOSPI closed at 6,417.93, up 0.46 percent, hitting an all-time high for the second consecutive day. However, the gains have been largely concentrated in the two tech giants. According to the Korea Exchange, as of Wednesday, the combined market capitalization of Samsung Electronics and SK hynix reached approximately 2,140 trillion won. This represents 41 percent of the total KOSPI market cap of 5,200 trillion won ($3.5 trillion). A year earlier, the two companies' combined market cap stood at 1,350 trillion won or around 30 percent of the total. The most significant risk factor is the surge in debt-leveraged trading. According to the Korea Financial Investment Association, the outstanding balance of margin loans reached 34.7 trillion won as of Tuesday, marking another all-time high. The figure has been on a steady upward trajectory since surpassing 30 trillion won on Jan. 29. In response to rising volatility, brokerages have raised margin requirements and banned new transactions in contracts for difference (CFDs) - derivative products that allow investors to settle price differences in cash without owning the underlying asset. Despite these measures, implementation for Samsung Electronics and SK hynix has been slower than for other stocks, raising questions about their effectiveness. Non-bank lending is also increasing. Card loan balances reached nearly 43 trillion won in the first quarter, another record high. Data submitted by the Financial Supervisory Service to the office of Lee Hun-seung of the People Power Party shows that new card loan issuance to high-credit borrowers - those with scores above 800 - exceeded 3 trillion won in the fourth quarter. High-credit borrowers are increasingly turning to high-interest card loans, which can carry rates of around 15 percent, to fund real estate and stock investments, the FSS said. The trend is driven by tighter mortgage lending at commercial banks and efforts to capitalize on the surging KOSPI. While household financial assets have grown significantly from 960 trillion won in 2024 to 1,430 trillion won last year, the KOSPI's volatility remains a concern, as a growing number of investors may struggle to repay their debts. When the KOSPI plunged more than 12 percent on March 4 following the blockade of the Strait of Hormuz, the ratio of forced liquidations to outstanding credit reached 6.5 percent - the highest level since the market shock during the early stages of the coronavirus pandemic in March 2020. 2026-04-22 17:34:19
  • Koreas March producer price surge by steepest in nearly four years
    Korea's March producer price surge by steepest in nearly four years SEOUL, April 22 (AJP) - South Korea’s producer prices surged at their fastest monthly pace in nearly four years in March, driven by supply-chain disruptions stemming from an energy shock triggered by the outbreak of war in the Middle East, coupled with a global semiconductor shortage, in a prelude to a broader spike in inflation. The Bank of Korea (BOK) reported on Wednesday that the Producer Price Index (PPI) rose 1.6 percent from the previous month, the sharpest increase since June 2022. On an annual basis, the index climbed 4.1 percent, signaling a potential bump-up in consumer inflation after a two- to three-month lagged pass-through. The spike was primarily driven by industrial goods, which rose 3.5 percent on month. Energy-related products bore the brunt of geopolitical volatility following the blockade of the Strait of Hormuz, with coal and petroleum prices skyrocketing 31.9 percent, the highest since December 1997, when the country was in a bailout crisis. Naphtha and diesel prices soared 68.0 percent and 20.8 percent, respectively. Chemical products also felt the heat from rising raw material costs, climbing 6.7 percent as prices for key inputs such as ethylene and xylene jumped significantly. The technology sector added to cost pressures on the manufacturing front. Prices for computers, electronics and optical instruments rose 4.1 percent, led by a staggering 101.4 percent surge in computer memory and an 18.9 percent increase in DRAM prices. Agricultural and fishery prices offered slight reprieve, falling 3.3 percent. Seasonal factors led to sharp declines in the prices of strawberries and onions, which dropped 42.5 percent and 53.4 percent, respectively, partially offsetting the broader industrial gains. The underlying data suggest deepening cost pressures across the supply chain. The domestic supply price index rose 2.3 percent, while the cost of imported raw materials surged 5.1 percent. The total output price index, which includes exports, rose 4.7 percent, bolstered by a 14.6 percent spike in export prices of industrial goods. This was exacerbated by continued weakness in the Korean won, which averaged 1,493.83 against the U.S. dollar in March — the fourth-lowest monthly average on record. The rapid cost buildup presents an immediate challenge for new BOK Governor Shin Hyun-song. During his inauguration on Tuesday, Shin identified stabilizing prices as his top priority, warning that “rising international oil prices are simultaneously exerting upward pressure on inflation and downward pressure on economic growth.” 2026-04-22 07:28:18
  • Roller-coaster KOSPI turns into a playground for high-frequency traders
    Roller-coaster KOSPI turns into a playground for high-frequency traders SEOUL, April 21 (AJP) — South Korea’s stock market is back on a roller-coaster ride, with sharp swings raising concerns that high-frequency trading (HFT) and weak oversight are amplifying volatility and feeding unfair practices. The KOSPI rally, which had pushed past the 6,000 level, was abruptly halted by the late-February outbreak of war, sending the market into a steep downturn. The index has since rebounded and is again heading toward new highs, underscoring the intensity of recent market swings. Such volatility has drawn in day traders and algorithm-driven players. According to data submitted to the office of Democratic Party lawmaker Kim Seung-won by the financial watchdog earlier this month, more than 2,200 high-frequency trading accounts were registered with the Korea Exchange in February alone. The transaction value from these accounts reached nearly 4,000 trillion won ($2.72 trillion), accounting for approximately 60 percent of total trading value that month. High-frequency trading refers to algorithm-based transactions executed in seconds or milliseconds. While it is credited with providing market liquidity, it is also blamed for amplifying volatility. “Electronic trading platforms can facilitate the growth of HFT firms, with a potential negative impact on the resilience of liquidity,” the International Monetary Fund noted in a recent report. The proportion of HFT in Korea is not unusually high compared with global peers. In the United States, such trading accounts for up to 70 percent of activity on Nasdaq, while Japan’s Nikkei 225 shows a similar level to Korea at 50 to 60 percent. Major European markets also see HFT volumes reaching up to 50 percent. The key difference lies in oversight. In the United States, the Securities and Exchange Commission and Financial Industry Regulatory Authority directly supervise HFT activity. Japan’s Financial Services Agency requires high-speed traders to register directly, a system also adopted in major European markets. In Korea, supervisory authority rests with the exchange itself. Because the Korea Exchange also profits from transaction fees generated by these accounts, critics argue the system is akin to “leaving the fish with the cat.” The Financial Services Commission and Financial Supervisory Service have also faced criticism, as specific regulations governing HFT remain lacking and investigations typically begin only after incidents occur. Meanwhile, suspected cases of unfair trading are on the rise. According to data provided to Rep. Kim by the exchange on Sunday, major domestic brokerage firms issued more than 12,000 regulatory actions against users from January to March this year — the highest level since the fourth quarter of 2021, when excess liquidity fueled a market-wide surge. Among these, 1,299 cases resulted in the most severe sanction — “refusal of entrustment,” or a suspension of trading. On average, about 20 accounts were frozen daily. Most cases involved “spoofing” — placing large orders with no intent to execute — or “wash sales,” in which simultaneous buying and selling creates a false impression of market activity. “It is true that unfair trading tends to be concentrated early in the year when capital flows in,” an official from the Financial Supervisory Service said. “However, the scale and frequency of these cases are unprecedented.” The Korean market has already exhibited significantly higher volatility than other major economies. Following the blockade of the Strait of Hormuz, the Korean stock market plunged about 19 percent over March 3–4, compared with declines of only 3 to 4 percent in Japan’s Nikkei and Taiwan’s TAIEX during the same period. The subsequent recovery was equally sharp. From March 4 to April 20, the KOSPI surged more than 25 percent, while the Nikkei rose about 9 percent. Reflecting this trend, the KOSPI Volatility Index stood at 50.32 as of April 20, more than double its level a year earlier. At the height of the sell-off on March 4, the index spiked to 80. As of Tuesday, the KOSPI closed at a record high of 6,388.47, up 2.72 percent. While the rally has outpaced gains in the Nikkei (0.9 percent) and TAIEX (1.7 percent), the market remains vulnerable to sharper declines in future downturns. 2026-04-21 17:06:53
  • New Bank of Korea chief stresses discretion as oil shock weighs prices and growth
    New Bank of Korea chief stresses "discretion" as oil shock weighs prices and growth SEOUL, April 21 (AJP) —New Bank of Korea Governor Shin Hyun-song underlined “discretion” and “flexibility” in steering monetary policy as Middle East-driven supply disruptions stoke inflation while weighing on growth. “Upward pressure on prices and downward pressure on the economy have simultaneously increased due to rising international oil prices following the Middle East conflict,” Shin said in his inauguration address Tuesday, as he began his four-year term. He pledged to enhance the “efficacy” of monetary policy through a reassessment of policy firepower and closer coordination with the government where needed, while also vowing to strengthen communication with markets. “We are going through a seismic transitional phase, with an AI-driven technological shift compounded by geopolitical conflicts,” he said. Domestically, Shin pointed to structural headwinds including demographic decline, widening income disparities, and growth constrained by housing instability and elevated household debt. “In today’s financial markets, the boundaries between banking and non-banking, as well as domestic and international sectors, are rapidly blurring,” he said. “It has become difficult to fully identify and respond to risks using existing frameworks alone.” He called for stronger early-warning systems by making more active use of market price indicators and improving visibility into the non-banking sector — a move seen as targeting regulatory arbitrage, with card loans approaching 43 trillion won ($29.2 billion). On foreign exchange policy, Shin signaled continuity. “Together with the government, we will promote 24-hour foreign exchange market operations and establish an offshore won settlement system,” he said, echoing plans set out by predecessor Rhee Chang-yong, who had pledged to introduce round-the-clock trading by July. On digital finance, Shin said the central bank would expand the use of a central bank digital currency (CBDC). “We will enhance the utility of CBDCs and deposit tokens through the second phase of ‘Project Hangang,’” he said, adding that international cooperation would be key to raising the won’s status in the evolving digital payments ecosystem. Shin also reaffirmed the importance of structural reform — a core theme under Rhee — calling it “an important part of monetary policy operations.” He takes office with the won still under pressure, as the dollar hovers near levels last seen after the global financial crisis. The currency was trading at 1,472.4 per dollar, retreating from around 1,520 won before the two-week truce between the United States and Iran. 2026-04-21 11:03:46
  • BOKs new chief to start work Tues after last-minute confirmation
    BOK's new chief to start work Tues after last-minute confirmation SEOUL, April 20 (AJP) — South Korea’s incoming central bank chief Shin Hyun-song is set to begin his term Tuesday under a cloud of unresolved personal controversies, after the National Assembly approved his confirmation report Monday following two earlier rejections. Shin marks the first nominee for the Bank of Korea governorship to fail to secure initial approval from the parliamentary Strategy and Finance Committee since confirmation hearings became mandatory in 2014. The former economist at the Bank for International Settlements faced intense scrutiny during his April 15 hearing over a range of personal matters, including family wealth, overseas asset holdings and alleged irregularities involving his children. Lawmakers raised concerns about his family’s substantial foreign-currency assets, an allegedly irregular transfer to Korea University, and questions surrounding his daughter’s failure to report her loss of Korean nationality, along with allegations of maintaining a so-called “paper residence.” “Approximately 93 percent of the nominee’s 4.6 billion won ($3.1 million) in financial assets are held in foreign currencies,” Rep. Park Dae-chul of the opposition People Power Party said, linking the issue to broader pressure on the Korean won from rising overseas investment. Rep. Chun Ha-ram of the Reform Party also pressed Shin over allegations that his daughter applied for residency using a canceled resident registration number after renouncing her Korean nationality. The committee had twice rejected Shin’s confirmation report on April 15 and April 17, citing delays in the submission of supporting documents. While the president can appoint a central bank governor without parliamentary consent, securing the committee’s endorsement is widely seen as critical to establishing political legitimacy at the outset of the term. By contrast, former Governor Lee Ju-yeol — the first to undergo the confirmation process — faced little resistance, with his reappointment smoothly approved in 2018. Shin’s immediate predecessor, Rhee Chang-yong, encountered some criticism over what was described as a “midnight appointment” and his long tenure abroad, but his confirmation proceeded without major controversy. President Lee Jae Myung is expected to electronically sign off Shin’s appointment during his state visit to India during the day to avoid a leadership vacuum at the central bank, as Rhee’s term ends Monday. 2026-04-20 17:09:28
  • BOKs Rhee swan song: central bank must act as think tank beyond rate tools
    BOK's Rhee swan song: central bank must act as think tank beyond rate tools SEOUL, April 20 (AJP) — Bank of Korea Governor (BOK) Rhee Chang-yong emphasized the central bank’s dual role as a think tank in his swan-song remarks before retiring Monday, even as critics argued the Bank of Korea strayed into non-monetary areas such as housing and education under his watch. In his final speech before stepping down, Rhee reflected on the limits of traditional policy tools after navigating multiple crises over the past four years. “Managing various crises over the past four years, I have realized once again that it is becoming increasingly difficult to achieve stability and growth through monetary and fiscal policies alone,” he said, stressing that deeper socioeconomic reforms are essential for policy effectiveness. He pointed in particular to changes in the foreign exchange market, warning that its structure has shifted in ways that constrain conventional responses. Rhee said the market, once dominated by foreign capital flows, is now increasingly driven by domestic actors such as corporations, individuals and the National Pension Service. “We have entered an era where domestic overseas investment fluctuates based on various factors, including the labor market, tax policies, pension systems and geopolitical risks, rather than just interest rate differentials,” he said. Under such conditions, relying solely on market intervention or interest rate adjustments to manage exchange rates could produce unintended side effects, he warned. Rhee also addressed structural challenges including low birth rates and sluggish growth, making clear that short-term policy measures would be insufficient. Labor and education reforms, he said, remain the only viable medium- to long-term solutions. He reiterated his long-held view that the central bank should expand its role beyond traditional monetary policy. “My belief that we should look beyond the boundaries of monetary and financial policy to become the nation’s top think tank remains the same,” Rhee said, urging continued research into structural issues such as housing, youth employment and elderly poverty. Reflecting on his tenure, Rhee described it as a period of “constantly having to exceed expected boundaries,” shaped by successive global and domestic shocks. Following the inflation surge triggered by the Russia-Ukraine War shortly after he took office, the central bank raised its benchmark rate to 3.5 percent, including two “big step” hikes. Those tightening measures were followed by a series of disruptions, including instability in real estate finance, the collapse of Silicon Valley Bank, rising household debt, surging housing prices in the Seoul metropolitan area and exchange rate volatility driven by Middle East tensions. Rhee cited inflation control as a key achievement. Consumer prices, which peaked at 6.3 percent in July 2022, eased to the high-2 percent range in late 2023 and have remained in the low-to-mid 2 percent range since 2024. He also pointed to the first decline in the household debt-to-GDP ratio in two decades as a meaningful milestone. The ratio, which peaked at 99.2 percent in the third quarter of 2021, has since fallen to the high-80 percent range. Additional achievements included the introduction of Korean-style forward guidance and the publication of more than 20 structural reform reports aimed at improving policy communication. Since 2022, the central bank has regularly issued “BOK Issue Notes” addressing non-monetary topics such as demographic shifts and changes in the global trade order. Internationally, Rhee was appointed as the first head of a non-reserve currency central bank to chair the Committee on the Global Financial System at the Bank for International Settlements. Despite these gains, Rhee acknowledged that financial and foreign exchange markets remain unsettled. The Korean won weakened about 9 percent from 1,367 per dollar in June 2025 to around 1,490 in April 2026, a sharper decline than other major Asian currencies such as the Japanese yen and Chinese yuan, which fell by only 1 to 2 percent over the same period. “It weighs heavily on my heart to leave while the foreign exchange and financial markets have not sufficiently stabilized due to the ongoing conflict in the Middle East,” Rhee said, expressing hope that stability would eventually return based on South Korea’s experience in managing past crises. Since taking office on April 21, 2022, Rhee has been credited with managing crises through timely interest rate adjustments in the early stage of his tenure, and expanding the central bank’s scope through the publication of issue notes. However, he also faces criticism for failing to take bolder monetary action against household debt, - holding benchmark rate still at 2.5 percent for 7 consecutive sessions - which surpassed 1,800 trillion won ($1.21 trillion), and the weakening won toward the end of his term. Shin Hyun-song, former head of the monetary and economic department at the BIS, is expected to succeed Rhee from Tuesday. Shin is clearly distinguished from Rhee by his track record of hawkish stances including preemptive interest rate hikes and balance sheet reductions during past crises such as the U.S. financial crisis and the Russia-Ukraine war, as well as his consistent emphasis on the intrinsic role of central banks. The National Assembly has yet to adopt a confirmation report due to ongoing controversies surrounding Shin’s foreign assets and alleged "paper residence." Whether President Lee Jae Myung will move forward with the appointment later today remains a key focus of attention. The won opened at 1,479.5 per dollar in the Seoul foreign exchange market, up 4 won from the previous session. 2026-04-20 11:53:31