Former Deputy Finance Minister Kim Yong-beom Criticizes Forex Authorities: "Unlimited Dollar Hoarding Is Open"

Kim Yong-beom, Visiting Research Fellow at the Korea Institute of Finance, is giving a lecture on the theme "The Future of the Global Economy and Investment in an Era of Turbulence, Balance, and Complex Crises" at the "2022 Asia Economy IPR Forum" held at the Bankers Hall in Jung-gu, Seoul, on the 8th. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Sejong=Reporter Kwon Haeyoung] Former First Vice Minister of Strategy and Finance Kim Yongbeom criticized the foreign exchange authorities for not taking appropriate measures regarding 'dollar hoarding' amid the won-dollar exchange rate surpassing 1,400 won.

According to government circles on the 26th, former Vice Minister Kim recently stated on his Facebook, "At a time when sentiment is crucial like now, it is too easy and unlimited for domestic residents to be the fastest in betting on the depreciation of their own currency."

He said, "The people who are most actively buying dollars in the current situation are our own people," adding, "During the 1997 foreign exchange crisis, citizens gathered gold to save the country, but this time, domestic residents are busily hoarding dollars with fiercer momentum than foreigners who are selling Korean stocks and leaving." He also pointed out, "While it is natural and not blameworthy for domestic residents to invest in overseas assets in the era of foreign exchange liberalization, the fact that betting on the depreciation of the domestic currency is unlimited needs to be reconsidered."

He explained that the foreign exchange authorities need to check supply and demand and find ways to minimize outflow factors so that domestic residents can trust the authorities' ability to defend the dollar and refrain from hoarding dollars.

He also diagnosed that the scale of dollar hoarding is related to the fact that the depreciation of the Japanese yen is not significantly different from ours. He pointed out, "Comparing Japan and our country, Japan has never raised interest rates, resulting in an extreme interest rate inversion with the U.S., yet the yen has only depreciated slightly more than the won," adding, "While the yen’s strength as a key currency and Japan’s much larger net external assets than ours also play a role, there is a big difference in the scale of dollar hoarding by domestic residents."

Former Vice Minister Kim entered public service through the 30th Administrative Examination in 1987 and is a representative financial and economic policymaker who served as Vice Chairman of the Financial Services Commission and First Vice Minister of Strategy and Finance. He worked as a senior financial expert at the World Bank for five years and is also an international financial expert who was the first in Korea to predict the economic crisis caused by COVID-19.