Prime Minister Kim: "Exchange Rate Rise Not a Fundamentals Issue...A Supply-Demand Matter"

Rep. Lee Inseon: "Won's Depreciation Is Due to the Lee Administration's Expansionary Fiscal Policy"

Prime Minister Kim Minseok said on the 10th that the recent elevated level of the won-dollar exchange rate is "not due to problems with fundamentals or our foreign exchange reserve position," adding, "At present, I see it as mainly reflecting supply and demand conditions."

Attending an interpellation session on economic affairs at the National Assembly that afternoon, Kim responded this way when asked by Lee Inseon, a lawmaker from the People Power Party, about what the government sees as the cause of the won's depreciation. He said, "We are watching very closely the fact that the exchange rate has risen to a certain extent."

Yonhap News Agency

When Lee asked whether the fact that the exchange rate has remained in the mid-1,400 won range since the launch of the Lee Jaemyung administration means this has become "a new norm," Kim replied, "It is hard to put it that way," and added, "The question of what level constitutes an appropriate exchange rate is not something I can speak lightly about."

Kim went on to say, "If we were to think in terms of the past, the recent exchange rate level would not be attributable to factors such as a sharp weakening of our economic fundamentals or a surge in external debt," adding, "Nonetheless, it is true that the exchange rate has risen to a certain extent, and we are watching that with great concern."

When Lee suggested that the cause of the won's depreciation lies in the expansionary fiscal policy of the Lee Jaemyung administration and the Democratic Party of Korea, Kim drew a line, saying, "I understand that is one way of looking at it from your perspective."

Lee said, "Since last August, under the Lee Jaemyung administration, the growth rate of the money supply, based on M2, has continued to exceed 8 percent month-on-month. How can the value of the won remain intact under such conditions?" He went on, "Yet the government is defending the exchange rate by mobilizing the National Pension Service together with foreign exchange reserves. Please be mindful so that this does not become like a child who is sick but, instead of going to the hospital for a diagnosis, keeps taking only fever reducers."

In response, Kim said, "The claim that the National Pension Service has been mobilized is neither verified nor confirmed," adding, "We will comprehensively consider everything, from fever reducers to injections to medicine."