Lee Chang-yong, Governor of the Bank of Korea, said on the 16th, "If the economy operates normally regardless of politics, I expect the won-dollar exchange rate to decrease by about 30 won."
After the Monetary Policy Committee decided to maintain the benchmark interest rate at 3.00% per year, Governor Lee said at a press conference, "If the exchange rate increased by 70 won, about 30 won of that is due to political reasons, such as the state of emergency." Recent won-dollar exchange rates have fluctuated around 1460 won.
Regarding the decision to freeze interest rates, he explained, "Looking at the economic situation alone, it would be natural to lower the rate now, but this time, I considered external balance centered on the exchange rate more." He added, "The exchange rate has risen more than necessary compared to normal situations, so we need to be mindful of its impact on prices and domestic demand."
Governor Lee noted that political risks are having a greater impact on the exchange rate than monetary policy and emphasized the need for a swift normalization of state affairs. He said, "The biggest factor affecting the real economy depends on how the political processes through the Constitutional Court are established and how our economic policies will be managed in the meantime."
He continued, "If the exchange rate remains above 1470 won, the consumer price index increase rate this year will rise by 0.15 percentage points (p) from the previous estimate (1.9%) to 2.05%." He added, "If international oil prices also increase alongside the exchange rate, the impact on prices will be even greater."
On this day, Governor Lee once again emphasized the need for a prompt supplementary budget. Previously, he underscored the necessity of an early supplementary budget during the price "price stability target operation status review press conference" on December 18 last year.
Governor Lee said, "In a situation where consumer sentiment has worsened, if we are going to implement a supplementary budget anyway, it would be better to do it as quickly as possible," noting, "Growth rates are declining, and besides monetary policy, other methods of stimulating the economy are needed."
He added, "As growth rates are declining, I think the supplementary budget is needed to a degree that compensates for that," and noted, "I believe a scale of about 15 trillion to 20 trillion won would be desirable."
However, Governor Lee added regarding the supplementary budget approach, "Since it is being enacted temporarily to respond to the economy, it is important to target support for self-employed individuals rather than providing indiscriminate assistance."