[Exclusive] Presidential Office convenes emergency exchange-rate meeting, 'calls in seven major conglomerates'

Korea Economic Daily

Summary

The Presidential Office said it urgently summoned representatives of the seven major conglomerates to respond to the recent surge in the won·dollar exchange rate.
The government said it is discussing measures to have export companies repatriate dollar assets earned overseas to defend against a decline in the value of the won.
It said incentives such as waiving currency exchange fees and tax benefits to induce large-scale dollar repatriation by companies are being suggested.

The Presidential Office is calling in executives from seven domestic conglomerates for an emergency meeting to respond to the exchange rate.

According to the Presidential Office on the 18th, Kim Yong-beom, the policy chief, urgently summoned representatives this afternoon from Samsung Electronics, SK Group, Hyundai Motor Group, LG Group, Lotte Group, Hanwha Group, and HD Hyundai Group. The won·dollar exchange rate had sharply surged to the 1,480-won range the previous day, and as this high-exchange-rate trend continued, the move is interpreted as a measure to comprehensively check the situation of domestic companies.

Above all, discussions are expected on measures to repatriate foreign-currency receipts earned overseas by domestic export companies. The Presidential Office is formulating a plan to have export companies repatriate dollar assets they hold without converting them into won. The aim is to have companies convert large-scale dollar holdings into won to defend the value of the won as much as possible.

However, it is reported that there is little room for repatriation because companies need to use dollars for large-scale local investments under Korea-U.S. tariff negotiations. How effective the government's incentive measures will be appears to be the key. Measures such as waiving currency exchange fees and providing tax benefits are being discussed.

The government's urgent move to prepare measures to stabilize the exchange rate is because a high exchange rate could stimulate prices and lead to a deterioration of public sentiment. Bank of Korea Governor Lee Chang-yong said on the 17th, "We are seriously aware that if a high exchange rate causes consumer prices to rise further, the public burden could increase."

On the 4th, President Lee Jae-myung instructed preemptive action at a senior secretaries' meeting, saying, "As perceived prices rise, they are becoming a considerable burden on people's livelihoods."

Reporters Kim Hyeong-gyu/ Han Jae-young khk@hankyung.com