BoK unlikely to be named FX manipulator

SEOUL: South Korea has pushed back against criticism of its foreign exchange policy and current account surplus, with the central bank governor saying it’s unlikely that the nation will be labelled an FX manipulator by the United States.

“I don’t think there is a large possibility of South Korea being named a currency manipulator by the Treasury, although there is a possibility the United States may change its currency monitoring criteria,” governor Lee Ju-yeol said after the Bank of Korea (BoK) kept monetary policy unchanged. “The BoK’s stance is that the FX rate should be determined by the market, and authorities only smooth when volatility is extreme.”

Currency policy is a sensitive issue in South Korea, with the government and central bank officially protesting against a recent media report that suggested the country has been manipulating the won. South Korea was listed on the Treasury Department’s currency watch list in October, along with China, Japan, Germany, Taiwan, and Switzerland, because it met two of three criteria used to monitor currency practices.

South Korea’s economic growth is expected to be in line with the path projected in January, with consumption likely to fall below the forecasts but exports and investment doing better, according to the bank’s statement. The central bank will keep its accommodative monetary policy stance, according to the statement. – Bloomberg