Lee Ju-yeol "Fed May Judge Need for Currency Swap Extension Has Decreased"

October 21 National Assembly Planning and Finance Committee Audit

Deputy Prime Minister for Economy Hong Nam-ki and Bank of Korea Governor Lee Ju-yeol attended the National Assembly's inspection of the Ministry of Economy and Finance and the Bank of Korea held by the Planning and Finance Committee on the 21st, listening to questions from lawmakers. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Jang Sehee] Lee Ju-yeol, Governor of the Bank of Korea, stated on the 21st regarding the extension of the currency swap with the United States, "Considering the significant improvement in economic conditions, it can be judged that the necessity for extension has decreased compared to the past." However, he also forecasted that it is difficult to make a premature decision on the extension.

At the comprehensive audit of the National Assembly's Planning and Finance Committee on the same day, in response to a question from Seo Byung-soo, a member of the People Power Party, about the extension of the currency swap with the U.S., Governor Lee said, "The result will be announced soon," adding, "I think the Fed will soon decide while monitoring the favorable conditions of the international market and the status of foreign currency funds."

He viewed the recent rise in the KRW-USD exchange rate as influenced by the Fed's tapering and the continued strength of the U.S. dollar. On the 12th, the KRW-USD exchange rate surged to 1,198.8 won, close to the 1,200 won mark, marking the highest level in about 1 year and 2 months.

Governor Lee said, "The biggest factors were expectations of changes in U.S. Federal Reserve policy, early visibility of tapering, and the strength of the U.S. dollar. It also seems to have been affected by risks from China's Evergrande Group and China's power shortages," adding, "It is not that the Korean economy's structure is weak causing the won's depreciation."

Regarding whether the U.S. dollar's strength is expected to continue, he stated, "There will be volatility, but it is difficult to predict the exchange rate, and mentioning the level or direction of the exchange rate might cause market misunderstandings, so it is difficult to comment."

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