Lee expects Korean won to ease to 1,400 level in 1-2 months
President calls KOSPI rally normalization after years of undervaluation
President Lee Jae Myung takes questions from reporters during a New Year's press conference at Cheong Wa Dae, Wednesday. Yonhap
President Lee Jae Myung vowed Wednesday to deploy all available policy tools to stabilize the Korean currency, sharing financial authorities’ projection that the won-dollar exchange rate is likely to fall to around the 1,400 range within the next month or two.
The president’s remarks triggered an immediate rebound in the won in the foreign exchange market, with the exchange rate closing lower for the first time in four trading days.
“The government has been steadily implementing effective policy measures, and financial authorities expect the exchange rate to ease toward 1,400 won per dollar within one or two months,” Lee said during a New Year’s press conference at Cheong Wa Dae.
The exchange rate had climbed above 1,480 won per dollar earlier in the session but plunged to the high 1,460s soon after the president’s comments. The rate closed at 1,471.3 won, down 6.8 won from the previous session.
Lee’s direct reference to authorities’ outlook and his firm pledge to stabilize the market were seen as unusual, immediately fueling an appreciation of the local currency.
Lee said the won often moves in tandem with the yen and noted that, compared with the yen-dollar rate, the Korean currency has depreciated less.
“If Korea were to fully mirror Japan’s exchange-rate level, the won could approach 1,600 per dollar,” he said. “But in the context of the yen-dollar linkage, the current situation remains relatively stable.”
He also characterized the recent period of elevated exchange rates as a global “new normal” rather than a phenomenon unique to Korea.
“While a weaker won brings drawbacks such as higher import costs, it can also benefit exporters,” Lee said. “Since this is not a trend that can be reversed by a single country, we will continue to seek sustainable measures to support currency stability.”
With regard to the KOSPI’s rapid climb toward the 5,000 mark, Lee described the rally as “a process of normalization after years of distortion,” saying the market is recovering from a prolonged period of undervaluation.
The KOSPI 5,000-point era was a key campaign pledge Lee put forward when he was a presidential candidate.
Lee cited risks related to the Korean Peninsula, weaknesses in corporate governance, stock price manipulation and political uncertainty as key reasons for the domestic market’s long-standing discount.
“The government’s goal is not to artificially prop up share prices, but to address structural issues and allow the market to operate on a sounder footing," he said.
The KOSPI closed at 4,908.98 on Wednesday, up 23.23 points, or 0.48 percent.