Bank of Korea Governor Shin Hyun-song signals possible rate hike and room for won to strengthen
Bank of Korea Governor Shin Hyun-song said that a rate hike may be necessary at an appropriate time in the future. He said the won could strengthen if tensions in the Middle East ease, and that the pressure for the won to depreciate would ease considerably if the interest rate gap between South Korea and the United States narrowed.
Bank of Korea Governor Shin Hyun-song 28 said that a rate hike would be necessary at an appropriate time in the future. While saying he was keeping open the possibility of a rate hike, Governor Shin explained that the current situation could be managed by waiting. The remarks were 28 made public.
Governor Shin identified the situation in the Middle East as the main cause of the won's weakness. He said the won had considerable room to strengthen if the situation in the Middle East eased. He added that currencies of oil-importing countries, including the yen, were also being affected.
Governor Shin said that pressure for the won to depreciate would ease considerably if the interest rate gap between South Korea and the United States narrowed. He spoke directly about the effect of a narrowing interest rate gap between the two countries on exchange rates. His remarks included language reflecting the interaction between interest rate and exchange rate movements.
Governor Shin said there was a possibility of missing the opportunity, while noting that for now the Bank could wait and respond if necessary. The remarks indicated that monetary policy operations allow for flexibility in timing and response. No specific timing or figures were mentioned.
The remarks can be summarized as a message that considers interest rates and exchange rates simultaneously. The Bank of Korea said it would continue to review the related issues at future monetary policy meetings. Any additional decisions will be announced later.