Bank of Korea Gov. Rhee Chang-yong unfazed by weak won

Bank of Korea Gov. Rhee Chang-yong speaks to reporters in central Seoul on Monday. [BANK OF KOREA]

Bank of Korea Gov. Rhee Chang-yong is not particularly worried about the drop in the value of the won.

"Though the Korean won has depreciated, the pace of deprecation is not as rapid as in other markets," he said during a press conference in central Seoul on Monday.

The Korean currency has fallen about 15 percent against the dollar since December 2020 and almost 5 percent since the beginning of the year. It is now trading at a 2-year low and approaching levels not seen in more than a decade.

Rhee's comments come as the Bank of Japan sticks to its zero-rate policy and the yen trades at a 20-year low. During the press conference, he noted the fast fall of the Japanese currency.

The won "will likely depreciate further if the U.S. ups the rate," Rhee said. "Though there are concerns about currency depreciation, I don't think it would be appropriate to adjust the base rate targeting the currency rate."

Falling currencies often fuel inflation as imports become more expensive.

Rhee, who has been central banker since Thursday, continued to keep the market guessing about his monetary-policy stance.

In his comments Monday, he said he did not want to discuss monetary policy in detail, but he did mention that he is more concerned about inflation than slow growth.

While this seemed to confirm previous statements that suggested the governor will be slightly on the hawkish side, he also made statements Monday that signaled an inclination toward easier money.

"I would like to be a dove when it comes to the long-term growth, and I believe that will be possible," he said, adding that he will have to discuss with monetary policy board members the speed of base rate increases and the direction of monetary policy.

During the press conference, he did not discuss high household debt, a subject he mentioned numerous times previously as both a nominee and after being inaugurated.

The next Monetary Policy Board meeting is scheduled for May 26. At the last meeting, on April 14, the central bank increased the base rate by a quarter point to 1.50 percent, the second increase this year and the fourth in this round of tightening.

The Fed raised rates by a quarter point in March, and as of early this month, analysts were anticipating two half-point increases in a row, in May and in June, according to Reuters. The next Federal Open Market Committee meeting is scheduled for May 3 to 4.

Rhee said previously that he is not concerned if the Fed raises rates at a faster pace than the Bank of Korea.

BY JIN MIN-JI [jin.minji@joongang.co.kr]