(LEAD) Korean won, but dollar liquidity ample to buffer shocks: BOK chief nominee

▲ Shin Hyun-song, nominee for the Bank of Korea governor, takes an oath at the outset of his confirmation hearing at the National Assembly in Seoul on April 15, 2026. (Yonhap)

(LEAD) BOK chief nominee-FX market

(LEAD) Korean won, but dollar liquidity ample to buffer shocks: BOK chief nominee

(ATTN: ADDS more remarks on monetary policy from 9th para)

SEOUL, April 15 (Yonhap) -- The Korean won has remained relatively weak in recent months, but the country has sufficient dollar liquidity to respond to external shocks, Shin Hyun-song, nominee for the head of South Korea's central bank, said Wednesday.

Shin made the remarks during a confirmation hearing at the National Assembly in Seoul, as he has been tapped to replace outgoing Bank of Korea (BOK) Gov. Rhee Chang-yong.

"It is not appropriate to comment on the specific level, but it is true that the (won-dollar) exchange rate has remained at a fairly high level over the past few months," Shin said. "Excessive currency depreciation is not desirable."

The nominee, however, noted that the country's foreign exchange reserves remain sufficient to serve as a buffer against external shocks.

As a factor behind the won's weakness, Shin pointed to the significant influence of offshore transactions.

"There appears to have been a 'tail wagging the dog' phenomenon. Offshore non-deliverable forward (NDF) trading involving the Korean won has played a significant role in the currency's depreciation," Shin said.

"I will push to make the won more widely used globally and build an offshore settlement system so we can better manage the exchange rate and strengthen the currency's international standing," he added.

The won had hovered around the psychologically significant 1,500 won-per-dollar mark before easing to around the 1,450 level, as the conflict in the Middle East pushed up global oil prices and rattled global markets.

Asked about his assessment of the BOK's monetary policy path, Shin said, "It is too early to move decisively in one direction," describing the central bank's decision last week to hold rates steady as "strategic patience."

"The core of monetary policy is price stability. If Middle East risks persist and spill over more broadly, monetary policy action will be needed," Shin said.

At its latest rate-setting meeting on Friday, the BOK kept its benchmark rate unchanged at 2.5 percent, taking a cautious stance as uncertainty stemming from the Middle East heightened risks to inflation, currency stability and growth.

"When inflation and growth are in conflict, the key question is where to place greater weight. In the current situation, we will prioritize inflation, as South Korea is highly sensitive to oil prices and the impact of oil shocks can be substantial," the nominee said.

Shin said the likelihood of stagflation remains relatively low. Stagflation refers to a situation in which inflation and an economic downturn occur simultaneously.

"For an economy to be in stagflation, growth would have to turn negative. Though overall growth is likely to be weaker than initially expected, strong semiconductor performance and a supplementary budget will partly offset downward pressures," Shin said.

"The country's potential growth remains promising over the long term despite challenges, as it has strong technological capabilities and is well positioned to leverage the transformation driven by artificial intelligence (AI)," he added.

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