Lee Chang-yong "Foreign exchange market overly sensitive… Will intervene if volatility is severe" [Hankyung Forex Market Watch]

Lee Chang-yong, governor of the Bank of Korea, on the 12th described the recent weakness of the won as "the foreign exchange market reacting excessively sensitively to uncertainty." He also made verbal-intervention-like remarks that "authorities could intervene if volatility widens."

The governor said this in an interview with Bloomberg while attending a fintech-related event in Singapore that day. He cited external factors such as volatility in US artificial intelligence (AI) stocks and changes in US-China trade dynamics as reasons for the won's weakness, while adding that "the market appears to be reacting excessively sensitively to such uncertainty."

He also said, "Authorities are willing to intervene in the market if excessive volatility occurs." This was regarded as a verbal-intervention-like remark. That day in the Seoul foreign exchange market, the won·dollar exchange rate at one point rose to 1470 won (the won's value fell).

In the interview, the governor emphasized data-driven monetary policy, saying, "The strength and timing of rate cuts, and even a reversal in direction, depend on the data." News that the governor, who had been emphasizing a rate-cutting stance, even mentioned a shift toward rate hikes led to the 3-year government bond yield in the Seoul bond market rising intraday above an annual 2.9% (bond prices fell).

Reporter Kang Jin-gyu josep@hankyung.com