Former Bank of Korea Governor Rhee Chang Yong indicated that short-term volatility in the South Korean won should not cause undue alarm. He emphasized that the nation's economy has undergone significant structural transformations, making the won more robust compared to previous periods of instability.
Rhee noted that South Korea has shifted from being a net debtor to a creditor in international markets, a change that fundamentally strengthens the won's position and resilience. This structural shift provides a buffer against temporary market movements.
He also expressed surprise that recent market interventions aimed at stabilizing currencies primarily involved Japan and the United States, rather than a broader effort including European countries, which he suggested would typically be expected in a G7 context. This observation hints at potentially uncoordinated or localized intervention efforts.
Separately, the won recently hit its year's high, dropping to 1,334.7 won against the dollar in Seoul, its lowest level since October 4, 2024, when it was 1,331.3 won. This decline of over 220 won from a peak of 1,561.5 won on June 5, was partly driven by exporter dollar selling and yen strength. The National Pension Service's reported cessation of hedging and initiation of dollar purchases is also seen as providing a floor to the exchange rate, although analysts suggest this won't reverse the overall upward trend of the won driven by a current account surplus and strong semiconductor exports.
