SEOUL, April 13 - The nominee for governor of the Bank of Korea, Shin Hyun-song, said in written remarks submitted to parliament on Monday that a measured response would be required if the won depreciated excessively. His statement was provided ahead of a parliamentary confirmation hearing scheduled for Wednesday.
"Although dollar-won exchange rates recently fell slightly to the 1,480 level, their increases since the Middle East war had been bigger than other currencies and uncertainty is still high, so we will closely monitor foreign exchange market conditions," Shin said.
The won weakened on Monday by as much as 1.1% to 1,499.7 per dollar, following weekend talks between the U.S. and Iran that failed to produce an agreement to end the war. Shin noted that, given currently stable liquidity conditions, the level of the dollar-won rate itself did not merit undue concern. He declined to provide a specific outlook for exchange rates when asked by a lawmaker.
On monetary policy, Shin said that any heightened inflation pressure stemming from the Middle East conflict would be a primary consideration in upcoming policy decisions, according to a report by the Yonhap News Agency.
Addressing economic growth, Shin said downside pressure on growth is being partially offset by robust semiconductor exports and the effect of an extra budget.
Last week, the central bank kept its policy interest rate unchanged and warned that the path ahead is highly uncertain, while flagging a downgrade to its growth forecasts and upward revisions to inflation projections.
Contextual note - Shin submitted written comments on Monday ahead of a confirmation hearing set for Wednesday; he highlighted foreign exchange monitoring, inflation risks from the Middle East conflict, and supportive factors for growth including semiconductor exports and an extra budget. The central bank's recent decision to maintain its policy rate and to signal uncertainty in its outlook was also referenced.