(LEAD) Korean currency volatility not at critical stage: BOK board member

▲ Lee Soo-hyung, a member of the Bank of Korea's (BOK) Monetary Policy Board, speaks during a press briefing in Seoul on March 17, 2026. (Yonhap)

▲ A worker at a self-service budget gas station in the city of Osong, North Chungcheong Province, posts lower prices for gasoline and diesel on March 16, 2026, following the government's implementation of the fuel price cap scheme. (Yonhap)

(LEAD) BOK member-FX volatility

(LEAD) Korean currency volatility not at critical stage: BOK board member

(ATTN: RECASTS lead with more info; ADDS details in last 4 paras, additional photo)

SEOUL, March 17 (Yonhap) -- The recent volatility and weakness of the Korean currency against the U.S. dollar, sparked by the ongoing Middle East crisis, do not pose a serious concern, though rising oil prices could push up inflation and weigh on economic growth, a central bank board member said Tuesday.

Lee Soo-hyung, a member of the Bank of Korea's (BOK) Monetary Policy Board, made the remarks during a press briefing in Seoul, as the won has depreciated markedly per dollar since the start of this month following U.S.-Israeli strikes on Iran and intensifying regional tensions.

The won touched the significant psychological barrier of the 1,500-won mark Monday for the first time since March 2009, when South Korea was reeling from the global financial crisis.

"Despite the won's depreciation, it is difficult to view this as a problem unique to us. There is also an aspect where the won is used as a proxy hedging instrument for the Taiwan dollar among East Asian countries," Lee said.

"Given the overall foreign exchange supply and demand conditions, the current exchange rate level does not yet warrant excessive concern," she added.

The board member also noted that the Middle East crisis is not expected to significantly affect the semiconductor upcycle for now, and South Korea's current account surplus remains solid.

"It is too early to conclude that there is a divergence from our economic fundamentals. Both the government and the BOK have measures in place to stabilize supply and demand expectations and provide reassurance," Lee said.

The won had depreciated 3.84 percent against the greenback since the start of the month through Saturday, recording a steeper drop than other major Asian currencies. The Japanese yen and Chinese yuan have fallen 2.39 percent and 0.79 percent, respectively.

Speaking about the impact on the broader economy, Lee said the Middle East crisis could push up inflation while weighing on economic growth.

"Given rising global oil prices, it is clear that the crisis poses upside risks to inflation. Higher raw material prices act as a downside factor for growth," Lee said.

"But forecasts on how long this situation will persist continue to change, making it difficult to assess the actual impact on the economy," she said, adding that authorities will continue to monitor developments closely.

The central bank forecasts the economy to grow 2 percent in 2026 while projecting consumer inflation to expand 2.1 percent. Those projections assume that Brent crude will average around $64 per barrel this year.

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