[CRITICAL] 17% Volatility | Not Critical

On March 17, 2026, Lee Soo-hyung, a member of the Bank of Korea's Monetary Policy Board, announced that the recent volatility and weakness of the Korean currency against the US dollar do not pose a serious concern. The won has depreciated markedly per dollar since the start of the month, following US-Israeli strikes on Iran and intensifying regional tensions. The won touched a significant psychological barrier of the 1,500-won mark on Monday, for the first time since March 2009, when South Korea was reeling from the global financial crisis. This development has sparked concerns about the country's economic stability and the potential impact on inflation and growth.

The won has depreciated 3.84% against the US dollar since the start of the month, recording a steeper drop than other major Asian currencies. The Japanese yen and Chinese yuan have fallen 2.39% and 0.79%, respectively. The central bank forecasts the economy to grow 2% in 2026, while projecting consumer inflation to rise due to higher global oil prices. The current account surplus remains solid, with the government and the BOK having measures in place to stabilize supply and demand expectations and provide reassurance. The won's depreciation has also led to a decrease in fuel prices, with the government implementing a fuel price cap scheme to mitigate the impact of rising oil prices.

The Bank of Korea's Monetary Policy Board is responsible for setting the country's monetary policy, including interest rates and foreign exchange intervention. The board's decisions are guided by the Bank of Korea Act, which mandates the central bank to prioritize price stability and financial stability. The act also gives the BOK the authority to intervene in the foreign exchange market to stabilize the won and maintain financial stability. The government has also implemented various regulations to manage the impact of currency volatility on the economy, including the Foreign Exchange Transactions Act, which regulates foreign exchange transactions and imposes restrictions on certain types of transactions.

The depreciation of the won has both positive and negative effects on different stakeholders. Exporters, such as those in the semiconductor industry, may benefit from the weaker currency, as it makes their products more competitive in the global market. However, importers, such as those in the oil and gas industry, may face higher costs due to the increased price of imports. Consumers may also be affected, as the depreciation of the won could lead to higher prices for imported goods and services. The government and the BOK must balance the interests of these different stakeholders to ensure that the economy remains stable and grows sustainably.

According to Dr. Kim, a renowned economist at Seoul National University, the current currency volatility is a reflection of the global economic uncertainty and the impact of geopolitical tensions on financial markets. 'The depreciation of the won is not unique to Korea, as many currencies have been affected by the ongoing Middle East crisis,' Dr. Kim said. 'However, the BOK's decision to intervene in the foreign exchange market and stabilize the won is a positive step towards maintaining financial stability and supporting economic growth.' Dr. Kim also emphasized the importance of monitoring the situation closely and being prepared to respond to any further developments that may affect the economy.

In conclusion, the Korean currency volatility is a complex issue that requires close monitoring and careful management. The BOK's decision to stabilize the won and maintain financial stability is a positive step towards supporting economic growth. However, the government and the BOK must remain vigilant and be prepared to respond to any further developments that may affect the economy. Professionals and investors should stay informed about the latest developments and adjust their strategies accordingly. As the situation continues to evolve, it is essential to prioritize stability and sustainability to ensure that the Korean economy remains resilient and competitive in the face of global uncertainty.