President Lee: "The exchange rate will be around 1,400 won in a month or two…we will identify stabilisation tools"
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Summary
- President Lee Jae-myung said he would identify tools to stabilise the exchange rate, citing authorities’ forecasts that the won-dollar exchange rate will fall to around 1,400 won in a month or two.
- Lee said that if instability in home prices in the Seoul metropolitan area becomes a social problem, tax-policy tools such as real-estate holding taxes should also be mobilised.
- Lee said he will pursue five growth strategies, including locally led growth, growth for all, sustainable growth, and growth underpinned by culture and peace.
President Lee’s New Year’s press conference…lays out ‘five growth strategies’
Unusual remarks on the exchange rate…“hard to reverse with policy”
“Real-estate tax regulation is not desirable…a last resort”
President Lee Jae-myung said on the 21st that regarding the recent upward trend in the won-dollar exchange rate, “We will continue to identify all possible tools and work to ensure the exchange rate can stabilise,” adding that “according to the authorities responsible, there is a forecast that in about a month or two the won-dollar exchange rate will fall to around 1,400 won.” Although he was relaying the authorities’ outlook, the president’s unusual mention of the possibility of a weaker exchange rate helped push the won-dollar rate down in daytime trading for the first time in four sessions.
Speaking at the New Year’s press conference held at the State Guest House at Cheong Wa Dae, Lee said of the recent exchange-rate moves, “This is not a phenomenon unique to the Republic of Korea, so it is difficult to return it to its original level easily through Korea’s policy alone.” He added, “The won-dollar exchange rate has aspects of being linked to the yen-dollar exchange rate,” and said, “Compared with Japan, our currency has been devalued less.”
Lee said it is not the time to immediately roll out measures to strengthen real-estate holding taxes to stabilise home prices in the Seoul metropolitan area, but indicated they could be considered depending on future conditions. “Taxes are a means to secure national finances, and it is not desirable to repurpose them as a regulatory tool,” he said, adding, “That doesn’t mean we won’t use them because they’re not desirable—if the situation rises to the level of a social problem, we naturally have to mobilise tax-policy tools as well.” He signalled that if housing-price instability affects housing stability, the government could pursue tax reform in a direction that increases the tax burden related to real estate.
On Lee Hye-hoon, the nominee for minister of the Office of Planning and Budgeting, who has been embroiled in controversy over allegations including abuse of staff and improper subscription applications, Lee said, “It does appear there is an issue, but we also need to hear her explanation.” On whether he would withdraw the nomination, he said, “I haven’t decided yet what to do.” On whether to grant the prosecution service (the Public Prosecution Agency) supplementary investigative powers, he said, “I think it’s right not to, but there are cases where it is exceptionally necessary.” Responding to criticism from some within the ruling camp that his reform drive may be backtracking, he said, “The goal of reform is not to take power away from the prosecution.”
The theme of the press conference was “A great transformation achieved together, a great leap forward enjoyed by all.” Lee stressed that to achieve the goal of a great leap forward, he will push five strategies: locally led growth, growth for all, sustainable growth grounded in safety, culture-led growth, and growth underpinned by peace.
Reporter Han Jae-young jyhan@hankyung.com
