Photo : YONHAP News
Anchor: A key IMF official suggested that exchange rate volatility does not pose significant challenges for the South Korean economy. The official made the remarks during a press briefing on the IMF’s economic outlook for the Asia-Pacific region as concerns are rising over the recent depreciation of the Korean currency.
Kim Bum-soo has this report.
Report: The IMF says the pressing issue for the Korean economy is not the exchange rate but inflation.
Krishna Srinivasan, director of the IMF’s Asia and Pacific Department, presented the assessment during a press briefing on Thursday, dispelling concerns over the rising won-dollar exchange rate.
[Sound bite: Krishna Srinivasan – Director, IMF Asia and Pacific Department]
“In the case of Korea, I would say the exchange rate volatility does not pose significant economic challenges given limited currency mismatches and manageable pass through to inflation.”
Earlier this week, the Korean won-to-dollar exchange rate briefly spiked to over one-thousand-400 won amid fears over the current Israel-Iran conflict.
[Sound bite: KrishnaSrinivasan – Director, IMF Asia and Pacific Department]
“… for the focus of monetary policy in Korea should be on inflation, what’s happening there. And it’s still about target. So it should be firmly on the tightening mode until inflation comes back to target. So again, I said focus on what are the pressures, domestic pressures, and don’t be overly focused on what other central banks are doing and notably the Fed.”
While noting persistent price pressures from services in Korea, the IMF Asia chief suggested an appropriately restrictive fiscal stance while keeping the monetary policy on “the tightening mode.”
The IMF earlier this week introduced its World Economic Outlook, projecting slow but steady growth at three-point-two percent for the global economy this year, while warning of geopolitical challenges stemming from the Middle East.
[Sound bite: Krishna Srinivasan – Director, IMF Asia and Pacific Department]
“In some advanced economies, such as Korea, we expect a positive impulse from exports — driven in part by strong global demand for high-end semiconductors. Domestic demand would strengthen only gradually.”
On the back of steady recovery, the IMF maintained its growth outlook for the export-driven South Korean economy at two-point-three percent for 2024 and 2025.
Kim Bum-soo, KBS World Radio News.