Hyun-Song Shin: "Sharp Exchange Rate Fluctuations Driven More by Korea-US Interest Rate Gap Than Liquidity"

Bank of Korea Governor Confirmation Hearing

Shin Hyun-song, nominee for Governor of the Bank of Korea, stated on the 15th that “sudden fluctuations in the exchange rate are influenced more by the interest rate differential with the United States than by liquidity,” in response to concerns that excessive liquidity has driven up the won-dollar exchange rate.

Shin Hyun-song, nominee for Governor of the Bank of Korea, is attending a confirmation hearing held by the National Assembly's Committee on Finance, Economy, and Planning on the 15th, responding to lawmakers' questions. 2026.4.15 Photo by Kim Hyun-min

During his confirmation hearing at the National Assembly’s Committee on Finance and Economy that day, Shin said, “The money supply measured by M2 is an indicator that includes bank deposits, but since it is an endogenous variable, its relationship with the exchange rate is not certain.”

He added, “I believe that the interest rate differential with the United States may actually have a greater impact than the total amount of liquidity.”

Shin also explained, “When the exchange rate moves sharply, as it did in March, trading through forward exchange contracts has a significantly greater impact than the total amount of existing capital outflows. Such forward exchange trading is ultimately determined by the interest rate differential between Korea and the United States.”

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