South Korea's central bank governor declined to say directly whether the recent steep drop in the dollar-won exchange rate amounts to herding, instead repeating that predictability matters, according to KB Think. The remarks came as the won has climbed more than 200 against the dollar in three months. Even at the end of last month, when the rate was falling by as much as 20 won in a single day, the Bank of Korea kept to its position that the move was a correction reflecting fundamentals rather than herding.
Asked how far the rate would need to fall from its recent high before the bank would call it herding or excessive volatility, Governor Shin Hyun-song again answered that predictability is important, KB Think reported. The governor's choice to stress predictability rather than assess the size or speed of the decline may be read as an effort to send markets a consistent policy signal.
A foreign bank currency dealer told the outlet that both the government and the central bank continue to make comments leaving room for further declines even around the 1,320 won level, suggesting the policy direction is clear.
The exchange rate has been a focus for markets alongside the Bank of Korea's rate decisions. Watch whether the bank moves from general language about predictability to a specific assessment of the won's decline, and whether officials address the 1,320 won level directly.
