Bank of Korea Governor Shin Hyun-sung: Possibility of Won Strengthening Ahead

Shin Hyun-sung, Governor of the Bank of Korea, stated on July 9 that "there is considerable potential for the won to strengthen in the future."

During a session of the National Assembly's Finance and Economy Committee, he responded to a question from Democratic Party lawmaker Moon Jin-seok, noting that "the current account surplus is accumulating significantly."

He added that while "currency swaps are always discussed within the framework of cooperation between governments and central banks," he emphasized that the purpose of such arrangements is to provide liquidity when it is depleted, and that "there is currently no lack of liquidity."

Regarding recent factors contributing to the rise in exchange rates, he mentioned that "the potential changes in U.S. monetary policy are strengthening the dollar," and also pointed to factors such as "portfolio rebalancing by foreign investors" in the domestic market.

Shin expressed optimism that the trend of foreign investors selling domestic stocks would ease. He explained, "Foreigners are continuing to sell as they reduce their holdings due to the significant rise in Korean stock prices," but he anticipates that "the selling pressure will subside somewhat in the latter half of this year."

In response to a question from Democratic Party lawmaker Yoon Hoo-deok about whether there are plans to raise the benchmark interest rate by a large step (0.50 percentage points), Shin clarified that mentioning the need for an interest rate hike was simply to convey a general perspective.

Yoon pointed out that the report indicated a need to raise the benchmark interest rate at an appropriate time, describing it as a "very proactive expression of an increase."

In response, Shin noted, "I mentioned the same wording in the monetary policy direction meeting in May, and it was also included in my speech at the Bank of Korea's founding anniversary."