Rhee Chang-yong, the Bank of Korea (BOK) governor, said at his final news conference on monetary policy direction on the 10th before stepping down that the thing he most regrets during his term was pointing to Korean retail investors trading U.S. stocks as the main cause of the won-dollar exchange rate's rise late last year and saying that "young people think overseas investing is 'cool.'" The remark drew criticism that the BOK, which should stabilize the exchange rate, was "shifting responsibility onto Korean retail investors trading U.S. stocks."
At the news conference at the BOK's main building in Jung-gu, Seoul, that day, Rhee acknowledged that his comment related to "Korean retail investors trading U.S. stocks" was a slip of the tongue. He said, "I was curious why individual investors were investing so much overseas, so I asked college students why, and when they said 'because it's cool,' I brought that up out of concern, but the media reported it as me saying it was 'cool,'" adding, "I regret it; it would have been better not to have said anything like that at all."
However, he said that even if he could go back, he would still express concern about the overseas investing by Korean retail investors trading U.S. stocks. He said, "At the time, including overseas investment exchange-traded funds (ETFs), there were large outflows (of investment funds)," adding, "Overseas investing by Korean retail investors trading U.S. stocks nearly tripled, so it was a situation where anyone would have had to be concerned." He continued, "I took flak (for that remark), but afterward we also discussed the National Pension Service and institutional improvements, so if I had to do (the briefing) again now, I would probably say (the same thing)."
Rhee also cited as a regret mentioning a policy shift in an interview conducted around the same time with Bloomberg TV. The interview took place on Nov. 12 last year in Singapore. At the time, Rhee said, "Whether there will be a change in the magnitude and timing of rate cuts, or a change of direction in policy, depends on the new data to come."
What stirred the market was the phrase "change of direction." At the time, the BOK was officially in a rate-cutting stance. But after the interview was released, the market interpreted it as the BOK firing a signal for rate hikes. As a result, on the 12th in the Seoul bond market, the 10-year government bond yield closed at 3.283%, up 8.1 basis points from the previous day (1 bp = 0.01 percentage point).
Regarding this, Rhee said, "Looking at the exchange rate and inflation, I thought expectations should not build too much toward continued easing, so I mentioned the possibility of a policy shift," adding, "I thought that remark would be interpreted as a hold, not as a hike."