Key Takeaways
Bank of Korea governor believes the dollar-won exchange rate won’t return to past levels
Difficulty in stabilizing the dollar-won rate
Market in a wait-and-see mood
President Yoon Suk Yeol’s martial law attempt caused economic uncertainty
Won quoted at 1,427.8 per dollar, showing volatility
South Korea’s central bank governor stated that the won currency is unlikely to shift wildly
The Bank of Korea aims to stabilize the foreign exchange market
External conditions, such as geopolitical tensions, can influence currency exchange rates- Bank of Korea adopting new reference rate to align with global trends and boost efficiency
- Goal to have at least 10% of interest rate swap transactions based on new rate system by 2025
- Plan to boost share of new rate system to over 50% by 2030
- Annual issuance of KOFR-based floating rate notes to reach 3 trillion won next year and grow to 5 trillion won in the longer term
- Deputy Gov. Ryoo sang-dai emphasizing that KOFR-based transactions will advance domestic financial market and boost effectiveness of monetary policy
- Bank of Korea (BOK) to adopt Korea Overnight Financing Repo Rate (KOFR) as new reference rate
- Goal to have 50% of interest rate swap transactions based on KOFR by 2030
Planned issuance of KOFR-based floating rate notes to reach 3 trillion won next year
Bank of Korea’s Initiatives to Stabilize Exchange Rates and Implement New Reference Rate
The Bank of Korea (BOK) has been actively working to stabilize the foreign exchange market and implement a new reference rate system to align with global trends and enhance efficiency. The governor of the Bank of Korea believes that the dollar-won exchange rate will not return to previous levels, highlighting the challenges in stabilizing the rate amidst market volatility.
President Yoon Suk Yeol’s recent martial law attempt has sparked economic uncertainty, contributing to the wait-and-see mood in the market. External conditions, such as geopolitical tensions, also play a significant role in influencing currency exchange rates.
To address these challenges, the BOK is adopting the Korea Overnight Financing Repo Rate (KOFR) as the new reference rate. The central bank aims to have at least 10% of interest rate swap transactions based on the new rate system by 2025, with a long-term goal of surpassing 50% by 2030. Additionally, the BOK plans to increase the issuance of KOFR-based floating rate notes to support the growth of the domestic financial market and enhance the effectiveness of monetary policy. Deputy Gov. Ryoo sang-dai is confident that KOFR-based transactions will contribute to advancing the financial market in South Korea.