ⓒ Japanese version of JoongAng Ilbo / JoongAng Ilbo2022.09.18 10:33
In the “Kingdol” period, the phrase “strong dollar” has changed to “Kingdol” once or twice. Given the recent strength of the dollar, it should be. The currencies of major countries depreciate against the dollar every day. The value of the gain is the same. The won exchange rate dropped to 1,393.70 won to the dollar on the 15th. It surpassed the level won at 1,390 for the first time in 13 years and five months.
The history of the Kingdle period left a cruel lesson. The strong dollar pushed South Korea and other Asian countries into a currency crisis in 1997, and caused a financial crisis in Russia the following year. It’s still the same. Sri Lanka has declared default and is in talks with the International Monetary Fund (IMF) for a $3 billion bailout. Pakistan and Bangladesh have also requested relief funds from the IMF. If the strong dollar combined with the default domino effect of emerging countries, the Korean financial market would not feel safe.
However, the situation of the South Korean government and the Bank of Korea remains at the level of “monitoring with vigilance,” according to Choo Kyung-ho, Deputy Prime Minister and Minister of Strategy and Finance. Given that the government has reacted comfortably to the exchange rate in the past, it is almost non-existent. This is because the foreign exchange reserves reached 436.43 billion dollars from the 5th, and the external soundness indicator is stable. In terms of foreign exchange reserves alone, China ranks ninth in the world, more than 20 times the amount of $20.4 billion at the time of the 1997 currency crisis. It is more than twice as high as the financial crisis of 2008. At any time , he decides that it is not enough to unwind the dollar and take measures to stabilize the market.
It is true that the underlying physical strength of the Korean economy is different from the strengths of past crises. Although the value of money earned has fallen significantly, the credit default swap (CDS) premium, which is a national credit risk indicator, has been on a downward trend since July. The current account balance is still at a good level, recording a surplus of 24.8 billion dollars during the first half of the year. Therefore, the government warns that if it overreacts and increases foreign exchange reserves more than necessary, the opportunity cost will increase and side effects may occur. The Bank of Korea recently explained that the appropriate size of foreign exchange reserves should be evaluated from a long-term and dynamic perspective.
[Colofn]Is it possible not to deal with foreign exchange?…We must strongly promote currency exchanges = South Korea (2)
