Lee Chang-yong: "Concerns Over Foreign Exchange Crisis Are Excessive"

"Current Liquidity Supply Level Does Not Raise Exchange Rates or Prices"

Lee Chang-yong, Governor of the Bank of Korea, described concerns about a foreign exchange crisis due to the rising exchange rate as "excessive worry."

On the 10th, Lee Chang-yong, Governor of the Bank of Korea, is delivering opening remarks at the emergency economic situation on-site inspection meeting held by the three opposition parties at the Bank of Korea headquarters in Jung-gu, Seoul. Photo by Heo Young-han

On the afternoon of the 17th, Governor Lee attended the plenary meeting of the Planning and Finance Committee held at the National Assembly in Yeouido, Seoul, and responded to some concerns that "a foreign exchange crisis might occur if the exchange rate rises to the 1500 won level" by stating, "Considering that a foreign exchange crisis is a crisis caused by the inability to repay external debt, our country is a creditor nation and there is absolutely no problem with borrowing or operating in the foreign exchange market," adding, "Worrying about a foreign exchange crisis is too excessive."

Regarding Park Seong-hoon, a member of the People Power Party's question about whether the unlimited repurchase agreement (RP) purchases by the Bank of Korea are increasing liquidity and thus causing the exchange rate and prices to rise, Governor Lee explained, "The intention to supply unlimited liquidity sufficiently is to create a safety net for market stability," and added, "The liquidity provided through RPs so far is about 14 trillion won, so liquidity has not been significantly loosened compared to the usual level of monetary policy."

He further added, "The rise in the exchange rate or prices due to liquidity loosening has nothing to do with the current level of liquidity."

When asked about the extent of the current impeachment phase's impact on the economy compared to the two previous impeachment phases, Governor Lee said, "It is a bit early to judge the economic impact, but if economic policy is maintained separately from politics as in the past two impeachment cases, the impact could be limited," and added, "However, since the external environment differs from before, we need to pay attention to changes in the external environment, which is our message."