Overview
- The central bank kept its benchmark rate unchanged and dropped easing-bias language, signaling a prolonged pause to protect financial stability as currency volatility persists.
- The won hovered in the mid-1,470s per dollar after a 10-session slide, briefly firming following comments from U.S. Treasury Secretary Scott Bessent.
- Bessent said the won’s recent depreciation is not in line with Korea’s fundamentals and warned that excessive foreign‑exchange volatility is undesirable.
- Officials highlighted that stable exchange rates are needed to execute the U.S. investment package, which allows adjustments to the timing and amount of annual funding if markets turn disorderly.
- Governor Rhee said roughly three-quarters of the weakness reflects external forces such as a soft yen and strong dollar, with domestic factors including rising overseas securities purchases and a $19.6 billion net outflow also contributing.