High Exchange Rate: Government Verbal Intervention Alone Cannot Stop It; The Only Condition for a Return to 1,300 Won Is 'This' | Dr. Noh Young-woo

Summary

Park Geun-young interviews Noh Young-woo about why the Korean won remains weak despite strong exports. Noh argues that the recent USD/KRW rise is driven less by the Korea-US rate gap and more by anxiety over large dollar outflows, including the US investment pledge, defense purchases, and overseas investment. He sees government verbal intervention as a volatility-smoothing tool, not a way to lower the level, and expects USD/KRW to stay elevated and choppy above 1,400 unless a Korea-US currency swap restores confidence.

• December exports and the trade balance were strong, led by semiconductors, but the won stayed weak.
• Noh attributes recent USD/KRW gains to dollar-outflow anxiety, not the narrowing Korea-US rate gap.
• Korea's $350bn US investment pledge, corporate overseas investment, and defense purchases are key FX concerns.
• Government verbal and smoothing intervention can reduce volatility but cannot sustainably lower USD/KRW.
• Retail investors and corporates are unlikely to sell dollars solely for tax incentives while expecting further dollar strength.
• A Korea-US currency swap could ease anxiety and potentially send USD/KRW back toward 1,100.
• Noh emphasizes the speed of FX moves over the level, warning rapid won weakness hurts imports and domestic policy.