BOK Governor Convenes Emergency Meeting as Won Breaches 1,500 per Dollar

Bank of Korea Governor Lee Chang-yong convened an emergency meeting after the won-dollar exchange rate surpassed 1,500, reviewing volatility in financial and foreign exchange markets.

The BOK announced on the 4th that it held a "Middle East Situation Monitoring Task Force Meeting" chaired by Governor Lee, discussing the background of the sharp rise in the won-dollar rate in London and New York markets the previous day and comparing movements against major currencies.

In the Seoul foreign exchange market, the won-dollar rate opened at 1,479.0, up 12.9 won, and immediately climbed to 1,479.4, approaching the 1,480 threshold. After news of the BOK's task force meeting broke, the rate retreated to 1,471.0, partially giving back gains.

Earlier, the exchange rate breached 1,500 around 12:05 a.m. and surged to 1,506 during trading. This marks the first time the won-dollar rate has exceeded 1,500 since March 2009, during the global financial crisis—a span of 17 years.

However, the BOK assessed that current conditions cannot be equated with past crises. "Dollar liquidity is abundant, and Korea's external borrowing spreads and credit default swap premiums remain at stable levels," the central bank explained.

External borrowing spreads reflect risk premiums based on domestic dollar supply-demand conditions in addition to the Korea-U.S. interest rate differential. Recent improvements in dollar supply conditions have led to a significant decline in these spreads, indicating that financial institutions including banks face relatively smooth conditions for overseas dollar funding.

The BOK left open the possibility that exchange rate and interest rate volatility could widen for the time being depending on developments in the Middle East situation. "We will closely monitor whether the won exchange rate and interest rates are deviating excessively from domestic fundamentals such as the current account balance," the BOK stated. "We will coordinate with the government as necessary to respond in a timely manner, preventing market sentiment from tilting in one direction."

Meanwhile, Governor Lee had been scheduled to depart in the morning to attend the Bank for International Settlements governors' meeting in Basel, Switzerland, but reportedly adjusted his schedule to the afternoon in light of the exchange rate surge.