After martial law, 80 won skyrocketed...Lower Interest Rates Despite Exchange Rate 'Anxiety'?

[Anchor]
Since the emergency martial law, the won-dollar exchange rate has soared by more than 80 won.

Although such exchange rate instability is likely to continue for the time being, the Bank of Korea has predicted a rate cut next year.

What's the reason?

I'm reporter Lee Hyungwon.

[Reporter] It was last month that the
won-dollar exchange rate exceeded the psychological Maginot line of 1,400 won.

Weak won on export outlook darkened by worsening semiconductor business,
The U.S. Trump administration's national priority ahead of the launch of
has coincided with the aftermath of encouraging the dollar to strengthen.

It is the emergency martial law that fueled this close exchange rate.

Immediately after martial law was declared, it jumped to 1,425 won,
After the first vote on the impeachment bill against President Yoon Suk Yeol
failed, it easily exceeded 1,430 won.

After that, when the impeachment bill of acting Han Deok-soo was passed, it rose to 1,500 won.

It soared to its highest level in more than 15 years since the global financial crisis, soaring more than W80 in just 24 days.

With the high exchange rate a direct hit on the already troubled economy,
Concerns over a second foreign exchange crisis have been raised around the
ruling party.

[Seo Sang-young / Mirae Asset Securities researcher: The bank collapsed when the Maginot Line (KRW 1,400) declared a state of emergency. The problem is that this speed is too fast. (However, the foreign exchange market in Korea is not that weak. (The foreign exchange crisis) is a phenomenon that occurs when there is a current account deficit and various settlement issues and so on..]

In fact, during the 1997 financial crisis, foreign exchange reserves were only $20 billion, but now they are more than $410 billion.

Considering this capacity, the Bank of Korea is shifting its monetary policy direction to taking care of the economy before the exchange rate instability.

It is an unusual sign of a further cut in the benchmark interest rate next year.

[Lee Jung-hwan / Professor of Economics and Finance at Hanyang University] There are concerns that these negative cycles of shrinking domestic demand, shrinking employment, shrinking investment, and shrinking employment will continue, so talk about easing monetary policy....]

Analysts say that if the economic response is delayed and domestic demand and corporate performance deteriorate, the won's price may fall without knowing, so the focus is on breaking the vicious cycle.

I'm Lee Hyungwon of YTN.

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video: Lee Jung-wook

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