In a crisis, Yoon must watch his words

Kim Dong-ho

The author is an editorial writer at the JoongAng Ilbo.

President Yoon Suk-yeol called on his Cabinet members to work hard for the country until their “shoe soles wear out.” Yoon indeed has been busy caring for the livelihoods of Koreans. Yet public approval ratings on his performance are under 30 percent. Though he has been playing his presidential role hard, his endeavors have been undone by a string of controversies around his behaviors and comments.

There cannot be a magic wand to make all the troubles and noise go away. The president has no other choice but to continue visiting people in need and communicating with them. He must send a strong message to unite the people. Without a clear message, any agenda the government seeks could be muffled in political disputes. Upon returning from North America, the president talked about his efforts to draw foreign capital to Korea and address the discrimination against Korean companies by the U.S. Inflation Reduction Act. But none got much attention since there was no mention of how the government would respond to the looming economic dangers. His comment about keeping an emergency mode 24/7 cannot be enough.

As the South Korean economy is in peril, foreign media outlets are raising alarm. Bloomberg cited the Korean won and Thai baht the most vulnerable to a currency crisis in Asia. The U.S. dollar last week raged towards 1,450 won. The won’s vulnerabilities won’t ease much even if the U.S. Federal Reserve yanks up the benchmark rate to 4.5 percent by the year-end and the Bank of Korea tries to keep up with a bigger-than-expected rate hike to lessen the gap.

The government is stumbling to clam the markets. Deputy Prime Minister for Economic Affairs Choo Kyung-ho met with former heads of the Financial Services Commission to seek their advice for crisis times.

President Yoon Seol-yeol reports to work at the presidential office in Yongsan, October 4. [JOINT PRESS CORPS]

On Oct. 1, Choo had a teleconference with U.S. Secretary of Treasury Janet Yellen to get a U.S. promise to supply liquidity if volatilities worsen. Authorities are making assurances that they will take preemptive action to keep a financial crisis at bay. But market conditions are worsening, helping to escalate political conflict among lawmakers.

The ambience ominously resembles the foreign exchange crisis in 1997. Foreign media and financial institutions warned of a looming crisis at the time, but Korean bureaucrats kept insisting on the strength of Korea’s economic fundamentals. A month later, Korea had to seek a bailout from the International Monetary Fund to avoid a national default.

Fundamentals of the Korean economy are strong today. At that time, the debt ratio of major companies exceeded 500 percent. This time, the ratio has dropped to under 200 percent. Large companies also hold their overseas revenue in foreign currency after finding the government not to be relied on if another currency crisis comes. That was a hard lesson earned from the 1997 currency crisis. The capabilities in chips, batteries, automobiles and other core manufacturing fields cannot be compared to 25 years ago.

But if concerns about the exchange rate grow, economic fundamentals cannot be of any protection. Korea’s foreign exchange reserves have been thinning since the peak of $469.2 billion last October. Amid instability in the exchange rate, local companies have suspended investment to stock up on cash. The trade balance has been in deficit for six consecutive months. Out of 15 mainstay exports, 10 have been falling on year. Mortgage rates already exceed 7 percent. For debtors, crisis has already arrived.

A presidential comment during crisis times is very important. Yoon must hold emergency meetings each day instead of saying the government is in emergency mode. Every word from the president affects the government, cabinet members and the legislature. If his remarks are entirely focused on the economy, public sentiment could change.

Yoon has been in hot water over his hot-mic moment during a recent trip to New York. Although what he said after a meeting with U.S. President Joe Biden could not be verified, the Democratic Party (DP) does not let it go.

Yoon must find a breakthrough with his rhetoric before sincerely seeking cooperation from the DP. Anger can be tamed by pleas and empathy. Former U.S. President Ronald Reagan used to discuss and refine his rhetoric with his aides before proposing a national agenda. President Yoon must understand that an impromptu monologue or offhanded text messaging can trigger a political conflict in this country.